The credit default swaps market should prepare for more
regulation, in the form of standardised contracts, from the US
In front of the US House of Representatives' agricultural
committee, Erik Sirri, SEC director of the division of trading
and markets, recommended a central counterparty (CCP), or
clearing house, to regulate the derivative swaps market and
implement contract standards.
"A CCP could further reduce risk through uniform margining
and other robust risk controls over its exposures to its
participants, including specific controls on market-wide
concentrations that cannot be implemented effectively when
counterpart risk management is decentralised," he said.
Credit term agreements...