‘Wrong type of liquidity’ spells trouble for energy hedges

Oil and gas producers are hedging less of their output; airlines have slashed their use of swaps by up to 90%; the over-the-counter commodity derivatives market has shrivelled to one-tenth of its 2008 peak.

On the face of it, these three data points tell a story of risk management in retreat, and appear to bear out warnings that seven years of bank and swaps market reform would deter hedging