Sir Andrew Large, deputy governor of the Bank of England, warned about the risks of the processes on the derivatives markets. The market is not explored enough to rush to the derivatives, he said at a banking conference in Istanbul.

“The growth of derivative instruments and advent of a range of new asset classes, despite added dispersion and better risk management, have added to the risk of instability arising through leverage, volatility and opacity. Systemically significant issues could increasingly arise from market related risks, or from single point-of-failure risks in the market infrastructure as ever greater volumes of transactions pass through,” Sir Andrew Large said during his speech.

Hedge funds and insurers are forming a high-risk group for the derivatives as the market is not ready for so many players and may contain reefs.

Recent downgrading status of General Motors and Ford at Standard & Poor’s unveiled earlier this month is justifying the statement.

GM and Ford went down to a «junk» status by Standard & Poor’s on a hefty sell-off in CDOs being involved in range of credit derivative products such as collateralised debt obligations and credit default swaps.