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Superfluous CDS Clearinghouse Earns Wall Street's Pity, Handful Of Trades


In early October of 2008, Ken Griffin and his partners-in-crime at the Chicago Mercantile Exchange had a dream. It was a dream of bringing "stability and transparency" to the credit-default swap market in such a way that would "reduce much of the systematic risk inherent" in those crazy derivatives.
That December, the CMDX clearinghouse/trading platform got the go ahead from the Commodity Futures Trading Commission. In March of this year, it received its final regulatory approvals.
And, if it's lucky, for Hannukah, it may actually get to clear a trade or two.

The CMDX, or what's left of it after Citadel and the CME dumped plans to offer electronic trading in September because nobody wants to play with them, is in talks--talks, people!--with some pretty heavy-duty CDS dealers. And sometime, maybe even today, one or two of them will agree to send the occasional trade its way. The first is likely to come on Dec. 15, a victory for those who set deadlines without even a smidge of leverage.
In the meantime, the InterContinental Exchange's clearinghouse has cleared $4 trillion in CDS trades, mostly because it started talking to--and bringing on as partners--potential customers from the start.
CME nears deal with banks on CDS clearing [FT]


Derivative Of Derided Derivatives In The Works

So credit-default swaps have a pretty bad rap in the wake of that whole financial crisis. And people apparently aren't interested in trading things that some parts of the general public (otherwise known retail investors) blame for the aforementioned unpleasantness without actually understanding anything about CDS. The IntercontinentalExchange has an idea to change all of that:

Maybe E*Trade Should Stop Giving Four-Year Contracts To Its CEOs

Like the four who held the job before him since its, er, difficulties began five-and-a-half years ago, Steve Freiberg did not do a particularly good job running E*Trade. But he's been compensated handsomely for facing the wrath of an angry Ken Griffin before getting a pink slip in August.

See page for author [Public domain], via Wikimedia Commons

The Nerds Have Won: Wall Street Edition

Get ready to report to the kind of people whose heads you used to stick in toilets.

TomasEE [CC BY 3.0], via Wikimedia Commons

NYSE Chief Does Not Want To Antagonize The Biterati

Launching a bitcoin futures contract might seem like a sop to the blockchain gang, but might actually be a plot to destroy our utopian digital currency future.

James Gorman Will Say Something Nice About Wall Street When Wall Street Earns It

If you're looking for a cheerleader, go bark up another tree. “Say you want to be out ahead of it and give a lot of speeches and talk about all the good we’re doing,” Gorman said today at an industry conference in New York. “And then some trader does some stupid thing like this guy at UBS did and he’s in jail and all bets are off,” Gorman said. He was referring to Kweku Adoboli, the UBS AG trader convicted of fraud this month in the largest unauthorized trading loss in British history...Traders at New York-based Morgan Stanley had too much latitude in the past, “what I call having an outsized sandbox,” Gorman, 54, said at the conference, which was sponsored by the Securities Industry and Financial Markets Association. “Until we can be really confident we’ve got discipline around the sandboxes, I think you have to be really careful not to be holier than thou,” Gorman said. “We’re going to be in the doghouse for a while.” Incidentally, this would a good time to mention that Gorman's bonus policy instituted last January-- STFU or GTFO-- still stands.