SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Non-Tech : Derivatives: Darth Vader's Revenge
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Hawkmoon who wrote (1692)9/16/2010 6:32:46 AM
From: axial2 Recommendations  Read Replies (1) of 2794
 
China Will Allow Credit Default Swaps, As Long As They Are Not Naked

"I have repeatedly argued that naked credit default swaps should be banned. "Naked credit default swaps" is the term coined to describe the situation where the buyer is not the referenced entity. The American government hasn't banned naked CDS. Instead, the government let the largest CDS traders write impotent laws which won't fundamentally change the ongoing danger from derivatives.

But the Chinese are being smarter. As Bloomberg notes:

China will introduce credit-default swaps by the end of this year, according to Shi Wenchao, secretary general of the state-backed National Association of Financial Market Institutional Investors. Investors in the derivatives will be required to own the underlying risk, Shi said today in an interview with reporters in New York. China plans to limit the amount of leverage used in the contracts to avoid the kind of financial crisis faced in the U.S. two years ago, he said.

In other words, China will allow CDS, but will prohibit naked CDS. Such a move shows - once again - that China is being much more realistic about the dangers of derivatives than the US. See this, this and this."

washingtonsblog.com

Jim
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News