WASHINGTON - The worldwide market for over-the-counter derivatives grew 7% in the first half, pushing the notional value of outstanding contracts to $94 trillion, according to a study released Monday by the Bank for International Settlements in Basel, Switzerland.

The growth was driven primarily by an increase in forward contracts, such as interest rate and foreign exchange swaps.

The study found that swaps "have increased at a more robust pace than other interest rate instruments." One possible reason for this, it said, is an increasing variety of available swaps contracts, resulting in more flexibility to meet users' risk-management needs.

The notional value measured by the study refers to the full value of the assets on which the derivative contracts are based. For example, an agreement to hedge foreign exchange risk on $1 million worth of Japanese yen has a notional value of $1 million, though the potential swing in foreign exchange rates, and the subsequent change in real value of the currency, is only a small percentage of that number. The actual value of the contract - measured by the amount of protection it affords the holder - is called the gross market value.

Though the notional value of over-the-counter derivatives increased during the six months the study examined, the ratio of gross market value to notional value fell to 2.7% from 3.2% six months earlier. The study attributed the decline to a reduction in market volatility.

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