As many of you might know, last year a dialogue between supervisors and credit derivatives dealers was initiated to support industry efforts to address weaknesses in the operations surrounding credit default swaps (CDS).
While we view these new instruments as an effective way to diversify and mitigate risks related to credit exposures from corporations, an industry-led study, the Counterparty Risk Management Policy Group II report, identified significant weaknesses in the infrastructure supporting sales and risk monitoring of these instruments.