CME Credit Default Swaps Marketplace (from the CME website)

CME Clearing provides participants with an open-access clearing solution for over-the counter credit default swaps. CME Group's OTC CDS clearing solution builds on the existing over-the-counter (OTC) market, with ISDA-based CDS contracts that are economically equivalent to the current OTC contracts.
The CME Group Cleared OTC CDS solution incorporates the proven benefits of our straight-through-processing clearing model to deliver:

• A time-tested regulatory segregation and portability framework that protects both customer positions and margin in the event that a clearing member defaults
• Clearing of CDS trades at the point of execution, which provides immediate cleared trade confirmation and settlement and leaves no window of credit exposure between bi-lateral parties to a trade they wish to clear
• Backloading of legacy positions into cleared trades, simplified through use of existing market infrastructure
• The ability for market participants to leverage their existing relationships and connectivity with CME clearing members
• More than 100 years of experience in clearing, settlement and risk management

CME Clearing enforces a rigorous risk management regime, featuring a multi-factor algorithm specifically developed for CDS products, which efficiently and accurately captures the risk of CDS portfolios. The CME Clearing risk management regime also offers the flexibility to mark positions to market, to ensure that all positions are continuously and adequately collateralized. Because of this proactive and rigorous risk management process, CME Clearing has never suffered a clearing firm default in more than a century of operation….

Read complete article at Credit Risk Chronicles

Publish Date: 16 December, 2009

Source URL: http://creditriskchronicles.blogspot.com/2009/12/cme-credit-default-swaps-marketplace.html