Royal Bank of Canada is expanding its credit derivatives trading business in the United States and Europe, betting that multibillion-dollar fundraising for artificial intelligence will fuel demand for hedging products .
Canada’s largest lender started making markets for U.S. dollar-denominated single-name credit default swaps in January and plans on eventually adding euro-denominated swaps, according to Santosh Sateesh, global head of credit derivatives trading at RBC. Sateesh, a veteran CDS trader who began his career in credit at Lehman Brothers in 2007, is also planning more hires in coming months as he expands in euro and other non-dollar markets.
The bank boosted its credit derivatives franchise in 2022 when it brought in Sateesh from Credit Suisse Group AG and started trading CDS indexes — or CDX — the same year. The desk has since added CDX options and CDS indexes tied to European companies and is now building its single-name CDS trading capabilities as it looks to expands its market-making business.
“We want to be a full suite, tier-one liquidity provider in this space,” New York-based Sateesh said in an interview. He leads a team of six traders and two sales people.
The expansion coincides with record debt issuance from Big Tech companies to help finance artificial intelligence projects, prompting strong demand for CDS as Wall Street seeks ways to hedge against potential losses or speculate on the creditworthiness of hyperscalers.
That’s helping attract interest from clients looking for cheaper ways to hedge or take advantage of relative value across asset classes, said Sateesh. Years-long efforts to overhaul and streamline the credit derivatives market are also boosting volumes, he added. RBC said its single-name CDS trading volumes for June almost quadrupled the year-to-date volumes while its credit index options volumes have doubled year-over-year.
“Volumes have increased when volatility increases and that speaks to the strength of the product,” said Sateesh.
CDS ‘Resurgence’
To be sure, Wall Street’s biggest banks have far larger balance sheets than most foreign competitors such as RBC, allowing them to trade more swaps each day and capture more business. RBC said its performance during periods of elevated volatility, including in April 2025, has been a key differentiator and growth driver.
That said, banks across the spectrum have been quick to capitalize on the market’s revival, creating new swaps as companies debut debt deals, launching new baskets and hiring top talent. Sateesh is betting on an experienced team — coupled with the ability to provide clients with market research and price the ease of buying and selling swaps in various market conditions — to give his firm an edge. The firm’s clients includes pension funds, banks and hedge funds.
He hired veteran CDS trader Jackson Graham last month as the head of single-name CDS trading.
“The single-name CDS market has gone through somewhat of a resurgence over the last year and a half,” New York-based Graham said in an interview. “As more issuers tap the investment-grade primary market, over time we will likely see a proliferation of more names to trade in the single name CDS space.”
Dodd-Frank regulations enacted more than a decade ago to make the market more transparent have boosted the allure of cross-asset trading by making it easier to capitalize on mispricings between credit and equities or credit and rates, according to Sateesh.
“There’s a lot of potential fruits on that banana patch,” he said. “Equity versus credit trades used to be once a week, now it’s multiple times per day.”
—With assistance from Tasos Vossos.