Credit Swaps Traders Start ‘Big Bang’ to Curb Risks
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Dealers and investors in the $27 trillion credit-default swaps market will start moving their trades onto a new set of standards today, an effort to curb risks and allow the trades to be backed by a clearinghouse.
The so-called Big Bang protocol will create a single standard for settling trades after defaults. It also creates a committee of dealers and asset managers to make binding decisions for the market, such as when the contracts can be settled, the International Swaps and Derivatives Association said in a statement today.