The head of the trade body for derivatives dealers testified before US lawmakers that credit default swaps offer a better indicator of risk than credit rating agencies, in a defence of a market that has been criticised in the wake of the credit crisis for its opaque nature.

Robert Pickel, chief executive of the International Swaps & Derivatives Association, told New York state legislators that CDS markets offer "better and more timely information" about credit risk than the reports produced by agencies such as Moody's and Standard & Poor's.