Credit derivative contracts offer a new route for managing counterparty exposures. This article discusses two formats …

One of the risks of making a bank loan or investing in a debt security is credit risk, the risk of borrower default. In … response to this risk, new financial instruments called credit derivatives have been developed in the past few years. Credit … derivatives can help banks, financial companies, and investors manage the credit risk of their investments by insuring against …

credit risk and bolster market liquidity, efficiency, and transparency. Used responsibly with these reforms, over … risk. Although OTC derivatives were not a central cause of the crisis, the complexity and limited transparency of the … market reinforced the potential for excessive risk-taking, as regulators did not have a clear view into how OTC derivatives …