Bear Stearns, Lehman Brothers and HSBC Bank USA have signed licensing agreements to become market makers in TRAC-X, the suite of credit default swap (CDS) index products developed by JPMorgan and Morgan Stanley.
The new additions bring the total number of market makers to join TRAC-X to eleven following JPMorgan, Morgan Stanley, BNP, Credit Suisse First Boston, UBS, Commerzbank, Nomura and Barclays Capital.
Morgan Stanley and JP Morgan say over $100 billion worth of TRAC-X has been traded since they combining their suite of globally traded CDS index products in April this year.
Lisa Watkinson, global product manager for flow CDS and credit indexation at Morgan Stanley, says TRAC-X is changing the way credit is traded: "In addition to simply trading a specific basket, the emergence of tranched TRAC-X and options on TRAC-X gives clients the ability to do in credit trading what had previously not been possible."