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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: JBTFD who wrote (140847)	10/11/2008 12:16:25 PM
From: geode00	Read Replies (1) \| Respond to of 173976

If no one is making up new CDOs (are they?) or subprime mortgages (ok, they are still making some) isn't this a self-limiting problem that will go away over time? I dunno. It seems like there should be a time limit on these things or some renewal process. They can't go on forever can they? It would be a sad thing if the market is continuing to take these kinds of risk even while it is unraveling like this. ======== marketwatch.com{A5ACF291-FC4D-478D-845D-8713E50448B3}&dist=hpts But the credit crunch has increased calls for more regulation of CDS, something that may not be in the interests of ISDA members. On Friday, the ISDA's Pickel said that despite "significant criticism," recently, the CDS market has continued to function and remain liquid, giving investors the chance to express their views, while other markets have tightened up. But one problem with the CDS auction process, and the market in general, is that it's often unclear how many contracts are linked to the debt of specific companies because there's no central repository for such information, CreditSights explained in a note to clients earlier this week. This lack of information sometimes means that auctions, like the ones for Fannie and Freddie this week, can produce surprising results, the firm added. Such problems will add to calls for changes to the CDS market. CreditSights reckons a central clearinghouse for trades would reduce counterparty risk and provide transparency. An official exchange for CDS trades would cut counterparty risk even more because it would take decisions on required margin levels away from the sell side brokerage firms that currently operate in the over-the-counter market, CreditSights said. Indeed, the New York Federal Reserve met this week with CDS market participants to discuss possible changes. There will probably always be over-the-counter trading in CDS, like there is in energy markets, CreditSights said. "If there was ever a time for an exchange product to emerge, however, this is certainly the time," the firm added.