Banks and large investors are seeking to revive a derivative market widely blamed for fanning the financial crisis, as they search for ways to forestall volatility when interest rates rise.
Wall Street is focusing efforts on building up single name credit default swaps, a derivatives contract that tracks the risk of default by a company that sells bonds. Regulators sought to clamp down on this market after the crisis as it was widely blamed for helping to inflate the credit bubble.
While volumes are resilient for credit derivative indices, swaps on individual companies have lost the support of banks and investors, with volumes now running at less than a third of the peak seen in 2008, according to data from the Bank for International Settlements.