EC naked sovereign CDS rules met with relief by traders

Murky on transparency

Sovereign credit default swaps (CDSs) have been extolled by risk managers and investors as a simple and efficient means of hedging the credit risk posed by certain countries. But in the eyes of some European policy-makers, they are a financial weapon of mass destruction pointed directly at the region’s governments.

The proof, they say, can be found in spread movements in the lead-up to the eurozone sovereign debt crisis, which peaked in May. As anxiety about the level of debt racked up by some E