More on coming clearinghouse for credit default swaps from Bloomberg.
Top hedge fund executives testified about the financial crisis before the House Committee on Oversight and Government Reform today, summarized by the FT. The execs didn’t fight the need for regulation but warned against excessive regulation. Standard, and justified, fare for market participants. It’s always the same thing with financial regulation: you need enough regulation
The utterly unregulated $55 trillion market for credit default swaps is getting closer to transparency as regulators are expected to approve a clearing house for the securities during November. The CME and Citadel Investment Group have played a key role in this process by creating an exchange for CDSs, which is a topic we covered
As the Lehman collapse showed us, the market for credit default swaps can wreak havoc on markets, since investment banks and hedge funds were making these markets in private. CDSs are insurance contracts on bonds and other credits that are a $62 trillion market, making it four times larger than the stock market, and utterly