Feb. 19 (Bloomberg) -- U.S., U.K., and European regulators are in talks to jointly regulate the $28 trillion credit-default swap market, the Federal Reserve said today.
Regulators including the Fed, U.K.’s Financial Services Authority, German Federal Financial Services Authority and European Central Bank met today to discuss a possible information sharing agreement, the Fed said in a statement on its Web site. The goal would be to apply consistent standards to the market and provide support across jurisdictions, the Fed said.
Dealers are under pressure to process credit-default swaps trades through a clearinghouse in the U.S. or Europe after last year’s failure of Lehman Brothers Holdings Inc., which was among the largest traders of the contracts. Earlier today, nine banks and brokers including Deutsche Bank AG, JPMorgan Chase & Co. and Barclays Plc committed to start using one or more clearinghouses within the 27-nation European region by the end of July.
“Central clearing of CDS is particularly urgent to restore market confidence,” European Union Financial Services Commissioner Charlie McCreevy said. “Given the size of derivatives markets I am looking whether other measures might be necessary to make sure they are adequately supervised and do not pose unnecessary risks to financial markets.”
Prices and Positions
Clearinghouses, capitalized by their members, add stability to markets by pooling the collateral of traders to share the risk of default. The practice also gives regulators access to prices and positions.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment