Just A Coincidence? MetLife Most Heavily Traded Corporate CDS Reference Name Just Days Before Escaping SIFI Designation

| About: MetLife, Inc. (MET)

Summary

MetLife has escaped regulation as a Systematically Important Financial Institution according to a judge's ruling today.

Was it a coincidence that MetLife was the most heavily traded corporate reference name in the credit default swap market in the week ended March 25?

Both by number of contracts traded and by notional principal, trading in MetLife CDS was at all-time highs last week.

cds Click to enlargeUsing data provided by the Depository Trust & Clearing Corporation, Kamakura Corporation reported today that MetLife Inc. (NYSE:MET) was the most heavily traded corporate reference name in the credit default swap market in the week ended March 25, 2016. It is an extraordinary coincidence that this spike in trading volume came just days before today's news that MetLife has escaped designation as a systematically important financial institution. By number of contracts, trading in MetLife CDS was at the highest level since DTCC began weekly reports of trading volume in July 2010.

cdscontracts Click to enlarge

By notional principal, trading volume in MetLife credit default swaps was also at record levels.

cdsnotional Click to enlarge

The spike in CDS volumes came at a time when trading volume in MetLife bonds due 2025 was quite modest and while credit spreads on the same bonds were in a steady narrowing pattern.

bonds2025 Click to enlarge

A spike in trading volume just prior to the release of material information is sometimes a coincidence. Sometimes it is not. Perhaps the SEC would be well served to determine whether it's just a coincidence this time or not.

gg

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