Credit conflicts

27 December 2002

This market is ripe for the abuse of privileged information. And on that the banks have form. The size of the creditderivatives market is increasingly at odds with its unregulated, opaque nature.

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US insurance and fund management companies have complained that the lending departments of some banks are telling traders at their firms of pending problems at corporate clients, the WSJE reported on Friday.

Credit default markets are the mechanism within which friendly commercial bankers and others privy to inside information can profit by betraying and destroying their clients through the use of inside information, Chris Dralynas, managing director of the world's largest bond fund Pimco, wrote in a research report earlier this year.

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