3 Also for the specific field of market infrastructures the relevance of network effects are being taken into account. The market for credit default swaps (CDS) has clearly revealed its systemic importance, as the default of one major counterparty has put the whole system under severe strain.
Therefore, I welcome very much that central counterparties for credit default swaps have been established to address first, the high degree of interconnectivity between CDS markets and credit and cash securities markets, second, the high leverage embedded in these financial instruments, and third, the significant concentration of related risks in a small group of major market players.