Isda proposes fix for ‘manufactured defaults’

Failure-to-pay must be linked to a deterioration in creditworthiness to trigger CDS payouts

Patching up the CDS market
Infopro Digital montage

The International Swaps and Derivatives Association will introduce a new causation test to determine whether a failure-to-pay will trigger payouts on credit default swaps.

The move is intended to stamp out so-called manufactured defaults and trigger-to-finance deals, which have drawn the ire of global regulators and threatened to undermine the credibility of the CDS market.

“We are proposing a new requirement that [a failure to pay event] needs to result from or in a deterioration in

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: