London's young market for credit derivatives is expected to grow by about 400% in the next three years to become the largest in the world, the British Bankers Association said.

The association surveyed 15 institutions involved in the market, who estimated on average the London market of outstanding credit derivatives amounts to about $20 billion, about the same size as New York's.

Credit derivatives allow two parties to exchange income and risk from their debt securities and are used mainly by large financial institutions in managing their risk. For example, they would allow one bank to buy a bond's income stream from another bank and assume the risk that the bond's issuer may default.

The survey's average estimate for the size of this market inLondon in 2000 is $100 billion, which the association said would make it the largest market in the world.

The survey respondents "now expect London will grow much more strongly than New York, because of the large international debt market here," said William Mason, an assistant director of the trade group.

Mr. Mason said the market, which is two to three years old, is dominated by about 15 banks.

The association said the market is likely to continue to be dominated by banks because of their experience in credit risk and credit products.

Credit derivatives are not listed on exchanges so it is difficult to measure the size of the market. The association estimates the size of the global market for all unlisted derivatives - including interest rate swaps, foreign exchange swaps and equity or index derivatives - is $47.5 trillion.

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