Alex Trias

Credit Default Swaps: Why I've Changed Sides

That's a very, very good point - I had not considered it from that angle. Thank you for your comment.


On Jun 02 03:23 PM Heaven, Hell or Hoboken wrote:

> While systemic risk will be reduced -- which is a very good thing
> -- I am not sure that the CDS market will grow. The very aspect that
> reduces this risk, namely margin requirements in the form of initial
> and variation margin, will increase the cost of participation. Also,
> the tailoring of transactions to meet individual needs will be eliminated
> to achieve the standardization necessary to promote liquidity. Finally,
> there is some proposed regulation to limit the universe of buyers
> of protection to those who hold cash positions in the underlying
> reference obligations. Taken together, these factors and in particular
> the last one would result in shrinkage of the market.