Regulators review margin rates for CDS

New rules on margining practices could have far-reaching effects on the credit default swap market, argues Fitch Ratings.

Credit default swaps, and over-the-counter derivatives more generally, have been a focal point of regulatory initiatives worldwide in the past couple of years, as policymakers attempt to enhance systemic stability while preserving the economic benefits of the instruments.

A central element of these initiatives is reviewing margin requirements and clearing of CDS contracts through central counterparty clearing houses (CCPs).

Aside from calibrating margin rates, policymakers must grapple with the