Breath of Liffe
Amid fierce competition and regulatory scrutiny, the combined initiative by derivatives exchange Liffe and clearing house LCH.Clearnet for clearing credit default swaps was launched on December 22. Will the two companies have a first-mover advantage? By Alastair Marsh
Counterparty credit risk well and truly came to the fore in 2008 following the exit from the market of two major derivatives dealers - Bear Stearns and Lehman Brothers. In an effort to minimise this risk, the idea of a central clearing counterparty for credit default swaps (CDSs) became a key topic of discussion among dealers and regulators.
The Federal Reserve Bank of New York has been leading the charge to set up a clearing house, while the European Commission stated its intention last October
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