EU funds net sellers of single-name CDS protection

A small but significant group of European funds are selling single-name credit default swaps (CDS) without hedging their positions, leaving them open to big losses if a reference entity collapses.

Data published by the European Securities and Markets Authority (Esma) reveals that Ucits funds were net long single-name CDS exposures as of October 2017, meaning they sold more contracts than they bought.

Total single-name CDS gross notional exposures stood at €96 billion, of which €58 billion

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