The Bank for International Settlements [BIS] is reporting Derivatives traded on exchanges surged 27 percent to a record $681 trillion in the third quarter.

The amounts are based on the notional amount underlying the contracts.

* Interest-rate futures, contracts designed to speculate on or hedge against moves in borrowing rates, led the increase with a 31 percent increase to $594 trillion.
* Trading in stock index futures and options rose 19 percent to a record $81 trillion in the third quarter, as investors speculated on whether the credit-market losses would spread to the equity markets.
* Trading in currency futures and options increased 18 percent to $6.4 trillion, the BIS said.

Investors may have shifted some trading to exchanges from the over-the-counter market to reduce the risk of counterparties defaulting on deals, the BIS said.