The International Swaps and Derivatives Association, Inc. (ISDA) today made the following comment on industry’s approach to the management of counterparty risk and the use of a central counterparty for CDS in light of EU Financial Services Commissioner Charlie McCreevy’s call to add to existing regulation of credit default swaps (CDS). This follows the Commission’s rejection of industry commitments on central clearing, first made to regulators in June 2008, and repeated to the Commission in December 2008.
“The CDS industry is dedicated to its very clear and demonstrable commitment to centralized clearing for these products,” said Eraj Shirvani, ISDA chairman and head of European Credit at Credit Suisse. “The industry has been the first mover on this matter, pursuing industry agreement on central clearing for CDS as early as 2006 and making global regulatory commitments in mid-2008, while also delivering industry-wide clearing solutions for a range of OTC products. We continue to urge coordinated global dialogue with all concerned regulators as a matter of priority. We respectfully urge the European Commission to resume its dialogue with the industry.”