Bloomberg is reporting that change, she is in the wind for the infamous "insurance like products."
Dealers plan to overhaul credit- default swaps in March to curb risks in the $28 trillion market, making the derivatives more like bonds and creating a committee that will arbitrate disputes.
For the first time, the market will have a committee of dealers and investors making binding decisions that determine when buyers of the insurance-like derivatives can demand payment and could influence how much they get, industry leaders said yesterday at a conference in New York. Traders also will revamp the way the contracts are traded, requiring upfront payments to make them more like the actual bonds they're linked to.
We are big fans of credit default swaps, and not only because we think John Paulson is so sexy. (He has this sort of quiet-genius charm that reminds us of someone, but we aren't quite sure who). Of course, since they are the cause of the downfall of AIG, Lehman Brothers, the income inequality situation, the breakup of your favorite band, cats and dogs living together, or, in short, all that ills this country and the world, they might be legislated right out of existence. (We doubt this, but it is a wonderful dramatic lead in to the third act of the piece here).
We are looking forward to the world where the only finance products permitted go up forever, and where everyone makes above average returns. That future is before us, and Chairman Harkin will take you there. Hold on, the first drop is a bit bracing.
Credit Swaps Overhaul Planned for March as Dealers Curb Risks [Bloomberg]