Developing a real US market

The US inflation derivatives market's growth has been sporadic, but there are now signs that it is entering a more sustained period of development. At a recent roundtable discussion in New York, BGC invited leading players to discuss how improved liquidity is creating opportunities for issuers, investors and dealers

Risk: Volumes have been extremely strong this year. Can we put some historical context around the market's current vibrancy? D'Arcy Miell: The interbank market has witnessed a gradual, rather than sudden, increase in volumes this year for both asset swaps and zero-coupon trades. We are on schedule to eclipse 2004, the busiest year so far, when around $12 billion of notional was traded through the entire brokered market in the US. By the start of May, around $4 billion of notional had been traded – including more than $1 billion during the fi rst week of May alone. The future looks promising. Certainly the US infl ation derivatives market is in its most buoyant state for years, and that is due to a combination of new entrants and re-emergent participants.

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