Sticking Issues with Credit Default Swaps [View article]
Just a thought experiment, but if all CDSs were put on a centralized exchange today even considering the notional amounts outstanding netted down to 10% of the $62 trillion figure that roughly $6.2 trillion, assuming an average of lets 25% of that for the average margins one still ends up with $1.6trillion in margin required that is still a lot of change to come up with.
Coming Soon: A Central Clearing House for Credit Derivatives [View article]
The netting risk is significant. Let's hope the efforts at compressing exposures in a single netting facility happen soon enough. A major default or cluster of smaller defaults could cause significant liquidity pressures and recursive failures to deliver.
Sticking Issues with Credit Default Swaps [View article]
Coming Soon: A Central Clearing House for Credit Derivatives [View article]