The future of CDS futures?

The future of CDS futures?

In this article from the Trade News, Peter Barsoom, COO of ICE, advocates their credit index futures product due to come to market shortly.  A few things to highlight:

– Interpreting from the articule, ICE’s proposed contract is a cash-settled credit spread future i.e. a future on each index’s credit spread.

– This does not offer the ability to buy and sell protection and so complements rather than substitutes cleared OTC CDS.  

– ICE has a multi-year exclusive license on iTraxx and CDX indexes (agreed in October 2012) from Markit which calculates and produces the indexes.

– It’s interesting that they haven’t gone with a futurized swap (credit index swap economics in an exchange trades future wrapper) or a deliverable swap future.


WSJ article: is this the first step towards regionalizing the swap market

WSJ article: is this the first step towards regionalizing the swap market

Barclays and presumably many other non-US headquartered banks are pondering how to respond to the Fed’s proposal to have non-US banks put up US subsidiaries to house their US activities where today many EU banks trade using a single global entity as far as is possible for financial resource efficiency and other reasons.

Is this the first step towards a fully regionalized swap market where e.g. there would be a separate price for the same swap among US entities and among EU entities?