Regulatory go-slow on CDS rules in China holds up market development

China launched its version of the credit default swap market nearly 18 months ago – yet activity has almost ground to a halt due to a combination of inflexible rules, lack of standardisation, and an approach to the concept of credit default that is unique to China


The onshore credit default swap (CDS) market in China started life with much fanfare in November 2010. Commercial banks, and smaller Chinese credit unions, anticipated significant benefits from a new mechanism to hedge their risk. Nearly a year and a half later, however, and according to market participants, liquidity is non-existent and the market is effectively at a standstill.

When Shi Wenchao, secretary-general of self-regulatory trade body, the National Association of Financial Market

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