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A Proposal on Transforming CDSs: Credit Insurance Trust

CDS are similiar to put option contracts. CDS should be traded on an exchange just like call and put options. investors should not be allowed to sell or write CDS contracts if they don't have the cash to cover the CDS contract if the CDS contract is excercised. No brokerage would allow an investor to sell or write naked put option contracts, without cash to cover the cost of buying the equity stocks, if the put option is excercised before its expiration.