07 Nov 2008, Victoria Pennington, Operational Risk & Regulation
BRUSSELS – The EU internal markets commissioner Charlie McCreevy has welcomed the outcome of the first meeting of the working group he set up to find a solution to clearing credit default swaps (CDS). The group’s objective is to set up a clear roadmap on how to ensure CDS are cleared through a central clearing counterparty by the end of this year. All participants today confirmed this timing was reasonable.
The group, composed of representatives from the industry and regulators, and chaired by the European Commission, has agreed that technical work would proceed in subgroups to deal with several issues rated to CDS clearing. These issues include which CDS types would be cleared by when; which standards should apply to central clearing counterparties to ensure their robustness; how to ensure coherence with work taking place in the US; how to deal with price reporting; and how to ensure adequate information and supervision by regulators.
Following technical preparation, the group is scheduled to meet again in early December.
In a statement made in October, as well as promising to set out a CDS clearing roadmap, McCreevy promised to take a “systematic look at the derivatives markets in the aftermath of the lessons learned from the current turmoil”, suggesting greater regulation of the market will be forthcoming.