Macaskill on markets: CFTC intervention raises reputation risks over Hovnanian default

An unusual move by a US regulator threatens to widen a conflict over potential manipu-lation of Hovnanian default swaps by Blackstone’s credit arm GSO.

As delegates to the annual general meeting of the International Swaps and Derivatives Association (ISDA) gathered in Miami on the evening of April 24, they had a surprise regulatory intervention in a trading dispute to digest.

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Christopher Giancarlo,
CFTC

The Commodity Futures Trading Commission (CFTC) announced that it is examining whether manufactured credit events designed to trigger default swaps constitute market manipulation, a few hours before ISDA delegates gathered at a reception by the pool in the Delano hotel in South Beach, and the implications of this action quickly became a main point of conversation.

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