A New Peek at Credit Default Swaps Market
The curtain cloaking the unregulated trading of credit derivatives will be pulled back a bit starting next week, potentially ushering in a new era of transparency for a market that government officials hope to soon police.
The Depository Trust & Clearing Corporation, which operates a central registry for derivatives known as credit-default swaps, will begin publishing weekly data on its Web site showing the amount of insurance-like protection bought and sold in privately negotiated contracts.
The DTCC has emerged as a rare source of information about a market that has fueled much of the uncertainty behind the credit crunch. The firm keeps electronic records of CDS trades for more than 1,200 customers, including all the major dealers on Wall Street.
The DTCC has traditionally kept CDS trading data private, although it broke with that tradition last month when it sought to dispell rumors about the impact that Lehman Brothers’ bankruptcy might have on the CDS market. The DTCC disclosed that it was warehousing $72 billion of Lehman CDS contracts, a sharp contrast to panic-inducing estimates that ran as high as $400 billion.
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