Credit derivatives: China begins cautious experiment with CDS

China took a further tentative step towards the reform of its financial markets on November 5 when nine counterparties began trading onshore credit risk mitigation instruments. Since then, though, market participants have raised concerns about the way the products are being introduced and regulated. The introduction of the instruments follows new guidelines laid out by the National Association of Financial Market Institutional Investors (NAFMII), on October 29. The new products are not being called credit default swaps, presumably because CDS are too closely linked with the global financial crisis.