Virtually nonexistent a decade ago, the over-the-counter market for interest rate derivatives has grown at a phenomenal pace in recent years to become an increasingly important part of world securities markets. Although these instruments offer firms obvious benefits in managing their cash flows, the growing size and visibility of the market, accompanied by an accelerating pace of innovation in new types of derivative instruments, has sparked debate over the risks posed by the growth of trading in derivative instruments and the appropriate scope of regulation of the over-the-counter market.

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