Rising rates lead to greater interest in structured products

Trading volumes ‘could increase fivefold’ as a result of short-term rates rise

Credit: Risk.net montage

The increase in short-term interest rates over recent months has been a problem for mortgage holders and businesses hit by the rise in the cost of borrowing. Yet the monetary clouds have had a silver lining for those banks offering structured finance products.

Demand has surged for structured notes linked to foreign exchange. Most banks had not been actively trading these niche products since the global financial crisis – market sources reckon that, post-2008, volumes in the FX structured note

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