Trade in over-the-counter derivatives increased by almost 60% in 1995 to more than $17 trillion, the International Swaps and Derivatives Association announced Wednesday.

The derivatives - including interest rate swaps, currency swaps, and interest rate options - are used by investors to hedge against adverse interest rate fluctuations and are privately negotiated and traded.

The association's survey, based on data from 71 swaps dealers worldwide, also revealed that interest rate swaps had grown by 45.3% last year, to $12.8 trillion. Banks use these derivatives to hedge against changes in short-term interest rates.

"The growing market clearly reflects recognition that privately negotiated derivatives have become a major risk management tool to hedge financial uncertainty in business and investment portfolios," said association chairman Gay Evans, a managing director of Bankers Trust International.

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