NY Fed Holds Second CDS Meeting
October 10, 2008
The Federal Reserve Bank of New York is holding a meeting today to discuss the creation of a central counterparty for the $55 trillion credit default swaps market.
The meeting, the New York Fed’s second in its effort to help establish such a counterparty, includes potential central counterparties Eurex, NYSE Euronext, CME Group/Citadel Investment Group and IntercontinentalExchange/Clearing Corp.
CME, the world’s largest derivatives exchange, and hedge fund Citadel said on Tuesday they have teamed up to create a central counterparty clearing facility for credit default swaps. CME Group, which runs the Chicago Mercantile Exchange, NYMEX and the Chicago Board of Trade, will be the central counterparty for the venture. The joint venture will operate as an independent organization with its own board of directors and management team (LFN, Oct. 8, 2008).
Depository Trust and Clearing Corp. were supposed to cut the ribbon at the end of the third quarter on a credit derivatives clearinghouse, but that was pushed back to the end of the year or early next year because of the fallout from the recent bank failures (LFN, Oct. 3, 2008).
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