17 August 2017
visit www.avoka.com

Creditex and Markit tear up $1 trillion CDS trades

24 November 2008  |  4265 views  |  0 Source: Creditex

Creditex and Markit today announced the compression of $1.036 trillion in notional value of credit default swap (CDS) transactions since the successful launch of a coordinated programme of multilateral trade terminations in August this year.

During the week of 17 November 2008, multilateral trade terminations administered by Creditex and Markit reduced the notional value of outstanding CDS trades referencing corporations in the consumer products, basic materials and financial services industries by more than $220 billion.

Since August, a total of 14 dealers have participated in 26 portfolio compression runs which have lowered outstanding notional amounts significantly, decreased counterparty credit exposure and reduced operational risk in the CDS market. Creditex and Markit run portfolio compression cycles regularly and systematically across the major sectors to tear up trades in the most active single name CDS contracts.

Portfolio compression reduces the overall notional size and the number of outstanding contracts in credit derivative portfolios without changing the risk profiles of the portfolios. This is achieved by terminating existing trades and replacing them with a smaller number of new replacement trades that carry the same risk profile and cash flows as the initial portfolio but require a smaller amount of regulatory capital to be held against the positions.

Sunil Hirani, Creditex Chairman and CEO, said: "The portfolio compression runs are a critical component in addressing operational issues highlighted by industry participants and regulators in recent months. We are pleased that our platform has been well received by market participants and will continue to help our clients meet their operational and capital needs at this crucial juncture of the markets."

Kevin Gould, Executive Vice President and Global Co-Head of Fixed Income at Markit, said: "The compression of over $1 trillion of CDS notional volumes in three months marks a milestone in the industry's effort to reduce risk and improve operational efficiency in the credit derivative markets. Our new portfolio compression service has become an integral part of market infrastructure, and we are pleased to have helped major trading firms around the world to reduce risk during a period of market dislocation."

Comments: (0)

Comment on this story (membership required)

Related company news

 

Related blogs

Create a blog about this story (membership required)
download the paper nowvisit www.worldpaymentsreport.comvisit www.dorsum.eu

Who is commenting?

Top topics

Most viewed Most shared
Coinbase raises $100mCoinbase raises $100m
10503 views comments | 14 tweets | 14 linkedin
DBS Bank launches online car selling marketplaceDBS Bank launches online car selling marke...
9904 views comments | 13 tweets | 11 linkedin
China preps central clearing house for mobile payments providersChina preps central clearing house for mob...
9858 views comments | 8 tweets | 15 linkedin
Monzo appoints Curve co-founder Foster-Carter COOMonzo appoints Curve co-founder Foster-Car...
8220 views comments | 1 tweets | 3 linkedin
hands typing furiouslyCompliance: Overcome the data deficit
7687 views 0 | 1 tweets | 8 linkedin

Featured job

Find your next job