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 The creation of a clearinghouse for credit default swaps is moving right along as the New York Federal Reserve is giving those vying to run it until Oct. 31 to submit written proposals on how they would reduce the systemic risk presented by the $55 trillion credit swap market, sources tell Bloomberg.
Once established the entity could generate roughly $100 million in
revenue annually. Those left in the running include the two largest
U.S. futures markets, CME Group Inc. and IntercontinentalExchange Inc.,
as well as Citadel Investment Group LLC, Clearing Corp., Markit Group
Ltd., Eurex AG and NYSE Euronext.
The New York Fed wants details not only on how trades would be processed and cleared, but also on how the operator would deal with the collapse of major issuers such as Lehman Brothers Holdings Inc. or American International Group Inc. However, the winner won't be chosen on the submitted plan, since the Fed is pushing the industry to police itself and set up the entity amongst themselves. Instead the plans will be used to help the Fed arrange a framework that it wants the eventual winner to adhere to. - George White See Bloomberg story See Dealscape post on Lehman CDS default See Dealscape post on CDS transparency Categories Deal Video
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