What's hot: betting on the direction of interest rates. What's not: wagering on corporate defaults.
The trend may explain why Bank of America Corp.'s Kavi Gupta, who headed a U.S. group trading credit-derivatives indexes, changed roles. In March, he switched to lead interest-rate swaps trading in the region, according to two people with knowledge of the matter.
Rate derivatives have become more popular than ever for wagering on whether borrowing costs will rise or fall as the Federal Reserve scales back its unprecedented stimulus. The amount of over-the-counter interest-rate swaps has swelled 30 percent since the end of 2009, to a record notional $584.4 trillion as of December, according to a May 23 CME Group Inc. report.
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