iTraxx

DEFINITION of 'iTraxx'

A group of international credit derivative indexes that are monitored by the International Index Company (IIC). The credit derivatives market that iTraxx provides allows parties to transfer the risk and return of underlying assets from one party to another without actually transferring the assets. iTraxx indexes cover credit derivatives markets in Europe, Asia and Australia.

BREAKING DOWN 'iTraxx'

The credit derivatives market is extremely large with notional amounts totaling $4.5 trillion in 2004. The iTraxx indexes were developed in order to bring greater liquidity, transparency and acceptance to the credit default swap market. These indexes are used by various licensed market makers, which include large investment banks such as Goldman Sachs, Citigroup, Deutsche Bank and UBS.