23 October 2017
visit www.avoka.com

European Commission sets year-end deadline for creation of CDS clearing counterparty

06 November 2008  |  8210 views  |  0 EU building, Brussels

The European Commission has set an end-year deadline for financial market participants to draw up a blueprint for the clearing of credit default swaps.

The Commission timetable follows the first meeting of a working group composed of industry representatives and regulators charged with finding a way to reduce risk and increase transparency in the multi-trillion dollar over-the-counter derivatives markets.

Participants at the meeting agreed that technical work would proceed in subgroups to deal with issues such as which CDS-types would be cleared by when, which standards should apply to central clearing counterpaties to ensure their robustness, how to ensure coherence with work taking place in the United States, how to deal with price reporting, and how to ensure adequate information and supervision by regulators.

The initiative mirrors efforts in the US, where the Federal Reserve has been co-ordinating with the Securities and Exchange Commission and other industry bodies to promote the swift creation of one or more central counterparties for credit default swaps.

The European Commission is keen to oversee the development of a complementary counterparty to cater for OTC markets in Europe.

Charlie McCreevy, European commissioner for internal markets says: "At $600 trillion, the size of derivatives markets today are such that we cannot let this OTC market continue without adequate counter party clearing. No one is able to say how these swaps will unwind. Regulators have little sight of potential liabilities that could be building up for individual participants. The opaqueness of these products leads to nasty surprises when things go wrong.

"Regulators need to have a much better view of where the real risks in these instruments lie. That is why I have decided to convene all the main players concerned to work through this. I would like to have by the end of this year concrete proposals as to how the risks from credit derivatives can be mitigated."

Intercontinentaexchange, Nyse Euronext, Eurex and the CME have each submitted plans to develop a CCP for the $60 trillion CDS market.

The EC working party is to reconvene in early December, when it is expected to present a clear roadmap for the creation of a CDS swaps CCP by the end of the year.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

ICE to acquire The Clearing Corporation as CDS clearing deadline nears

ICE to acquire The Clearing Corporation as CDS clearing deadline nears

30 October 2008  |  10237 views  |  0 comments
Eurex outlines CDS clearing proposal

Eurex outlines CDS clearing proposal

13 October 2008  |  10791 views  |  0 comments
CCorp unveils ICE alliance as Fed mulls CDS clearing proposals

CCorp unveils ICE alliance as Fed mulls CDS clearing proposals

10 October 2008  |  8404 views  |  0 comments
CCorp says CDS clearing counterparty will launch by year-end

CCorp says CDS clearing counterparty will launch by year-end

29 September 2008  |  5852 views  |  0 comments
TriOptima claims credit as CDS backlogs recede

TriOptima claims credit as CDS backlogs recede

25 September 2008  |  6273 views  |  0 comments
Liffe eyes over-the-counter CDS market

Liffe eyes over-the-counter CDS market

07 July 2008  |  10005 views  |  0 comments
CDS banks promise to cut backlogs

CDS banks promise to cut backlogs

06 October 2005  |  7567 views  |  0 comments
DTCC launches credit default swaps confirmation service

DTCC launches credit default swaps confirmation service

24 November 2003  |  7060 views  |  0 comments

Related company news

 
visit www.fivedegrees.nlvisit www.innotribe.comRegister now

Top topics

Most viewed Most shared
Mastercard to roll out blockchain APIMastercard to roll out blockchain API
19596 views comments | 29 tweets | 42 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
15238 views comments | 23 tweets | 32 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
10999 views comments | 12 tweets | 23 linkedin
Eight banks form joint venture to launch blockchain trade platformEight banks form joint venture to launch b...
9067 views comments | 14 tweets | 28 linkedin

Featured job

Competitive base + commission + benefits
Denmark, Finland, Iceland, Norway or Sweden

Find your next job