CDS Clearing
NYSE Euronext, the world’s largest stock exchange, plans to enter the fast-growing market for credit default swaps by the end of the year through clearing of over-the-counter contracts.
The move follows the poor performance of CDS products launched over the past year by CME Group and Eurex, the world’s two largest futures exchanges. Both have found banks reluctant to use the CDS contracts listed on the exchange.
Hugh Freedberg, head of global derivatives at NYSE Euronext and CEO of its Liffe derivatives arm, said: “The banks don’t want to have CDSs listed on an exchange. That’s where the others have got it wrong.”
Liffe plans to develop a contract that will be traded in the over-the-counter market and cleared through its BClear clearing system, which currently processes and guarantees equity derivatives contracts in Europe.
NYSE Euronext to clear over-the-counter credit default swaps
March 17th, 2008 at 3:18 am
Haven’t DTCC got this market pretty much cornered - in Europe at least?
March 17th, 2008 at 3:27 am
Noel:
The DTCC is not doing “real” clearing, i.e they are not the counterparty to OTC trades, just providing automated confirmations and payment services. I believe the NYSE aims to do real clearing like a futures exchange, the clearing house being counterparty to all trades. And that would be a good thing.