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]