But that should not obscure the fact that in terms of the overall economy - including here in the North West, things are better than they’ve been in a long while. And I am reasonably confident that we will find a way through the macro-economic, demand management, challenges. In the meantime there is a great deal that you can do - and are doing - yourselves, here in the North West, under the leadership of the NWDA, in partnership with the other public authorities, the Universities, and the private business sector, to identify - on the basis of your local knowledge - the particular obstacles to, and the particular opportunities for, creating a more positive and flexible supply-side environment for the future. In thanking you, Bryan, once again for joining with us in hosting this dinner this evening, I wish you all possible success. BIS Review 59/2002  3
Market participants and products The market for credit derivatives attracts a large number of market participants who have not been active in the credit market earlier. The most important buyers of credit risk are large institutional investors such as insurance companies and pension funds. Hedge funds are also large actors. The main sellers of credit risk are banks and other credit institutions who want to relieve themselves of parts of their credit risk, for instance to meet capital adequacy requirements from authorities or merely to use their capital more efficiently. In practice, the credit derivative market is centred on a few globally-active banks, which function as brokers in the trade. The ten largest counterparties on the market account for a good 85 per cent of the total volumes traded and are represented by large investment banks such as Morgan Stanley, Goldman Sachs and UBS. At the same time as the volumes have increased, the products have developed. The largest growth is currently in the new products, including what is known as index products. Somewhat simplified, a typical index product reflects a portfolio of credit risks in different companies, instead of reflecting the credit risk in a single company 3 . The index products increase the investors’ opportunities to spread their investments in the credit market. In this context, I would also like to mention that there are alternative credit insurance methods that have likewise developed strongly. One of these is traditional syndicated loans.