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Published October 28, 2008 at 1:52 PM
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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.
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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 WhiteSee Bloomberg storySee Dealscape post on Lehman CDS defaultSee Dealscape post on CDS transparency
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