This month should see the conclusion of the credit derivatives market’s moves to reinvent itself as a more stable and less risky industry by moving to centralized clearing in both the US and Europe. This has seen both markets adopt new CDS contracts: in the US the Standard North American Contract (SNAC) and in Europe the Standard European Contract or SEC (it’s a good job no-one had got to that acronym first). The US contract was introduced and began trading on April 8 this year – a process the market modestly dubbed “big bang” – and in Europe the SEC began trading on June 22, with the introduction of a central counterparty due on July 27 (“little bang”).
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