Tuesday, September 27, 2005

CNN Money: Wall Street storm may be brewing

Financial risks brought about by the untested exotic instruments as derivatives, which are now extensively used by hedge funds, have hit mainstream newswires, this report from CNN Money’s Amanda Cantrall, “Wall Street storm may be brewing

Some noteworthy excerpts...

``Hedge funds now manage an estimated $1 trillion in assets worldwide, and in some cases, a single fund can account for a big chunk of the volume on some exchanges...

“The credit derivatives market has swelled to an estimated $8.4 trillion -- that's trillion with a 't' -- and regulators are concerned about trading in these largely unregulated investments...

“Two complex derivatives -- credit default swaps and collateralized debt obligations -- have become especially popular with hedge fund investors in recent years.

Soaring Number of Hedge Funds

Exploding Credit Derivatives

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