Derivatives' decline - a danger sign?

London

A DECLINE in global derivatives trading to their lowest levels since 2007, is regarded as an indication that global markets have become sanguine.

The Bank for International Settlements (BIS), the central banks' central bank, has disclosed that the gross market value of interest rate, foreign exchange, equity and credit and commodity derivatives fell from US$15 trillion in 2016 to US$13 trillion in the first half of this year.

This is the lowest level since the end of June 2007 (see chart).

It compares with the all-time peak of US$35 trillion during the financial crisis of 200…