The bespoke conundrum

The dealer community has pushed towards standardisation of credit default swaps contracts, enabling them to meet a regulatory goal of ensuring a large chunk of the credit derivatives market is cleared through central counterparties. What implications does this have for bespoke trades? Peter Madigan reports

The drive by regulators to ensure as much of the over-the-counter derivatives market as possible is cleared through central counterparties is progressing at full throttle. On June 17, the US government laid out its plan to overhaul the financial system. In it, the US Treasury repeated its intention, already disclosed by Treasury secretary Timothy Geithner in earlier testimony to the US Congress, to amend the Commodities Exchange Act to require all standardised OTC derivatives contracts to be