CDS Execution and Clearing Mechanisms

Christopher L. Culp (), Andria van der Merwe () and Bettina J. Stärkle ()
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Christopher L. Culp: Johns Hopkins University
Andria van der Merwe: Johns Hopkins University
Bettina J. Stärkle: Compass Lexecon

Chapter Chapter 6 in Credit Default Swaps, 2018, pp 125-138 from Palgrave Macmillan

Abstract: Abstract A credit default swap (“CDS”) can be executed bilaterally by two counterparties, through a broker, or (in the USA) on a Swap Execution Facility (“SEF”) or an exchange. After the trade, the CDS may remain uncleared or can be novated to a central counterparty (“CCP”) for clearing. In a cleared CDS, the CCP is the counterparty to both CDS buyer and seller, guarantees the performance of the obligations under the trade to both trading counterparties, and administers a system of netting, marking-to-market, twice-daily cash resettlement, and margin. We review here the evolution of CDS execution and clearing (as well as the relevant regulations) and summarize CDS execution and clearing market activity in recent years.

Keywords: Credit default swap; CDS; CDS market activity; Swap execution facility; SEF; Dodd-Frank clearing mandate; CDS clearing; Central counterparty (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psircp:978-3-319-93076-3_6

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DOI: 10.1007/978-3-319-93076-3_6

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