Breath of Liffe

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Counterparty credit risk well and truly came to the fore in 2008 following the exit from the market of two major derivatives dealers - Bear Stearns and Lehman Brothers. In an effort to minimise this risk, the idea of a central clearing counterparty for credit default swaps (CDSs) became a key topic of discussion among dealers and regulators.

The Federal Reserve Bank of New York has been leading the charge to set up a clearing house, while the European Commission stated its intention last October

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