Net issuance of bonds and notes increased to $1.07 trillion, up from $371 billion in the first quarter. The increase came chiefly from the euro-denominated bond segment, said BIS, where net issuance of $464 billion was more than four times the level of the previous quarter. BIS also noted mortgage-backed bond issuance rose, particularly in the UK after the Bank of England's April announcement of a special liquidity scheme that enables UK banks to swap illiquid assets, such as mortgage-backed securities, for gilts.
The quarterly report also stated trading on the international derivatives exchanges retreated in the second quarter of 2008. Total turnover based on notional amounts decreased to $600 trillion from the high of $692 trillion recorded in the first quarter.
BIS said most of the contraction came from derivatives on short-term interest rates, but turnover also declined in derivatives on long-term interest rates and stock indexes. By contrast, turnover in foreign exchange derivatives was up over the previous quarter's level and increased by as much as 44% year-on-year. Turnover in commodities derivatives (measured only in terms of the numbers of contracts) dropped, although year-on-year growth remained 37%.