“We were surprised by the announcement of this case.” “Whether ICE had an unfair advantage or not, given the history of the (dealer-owned) Clearing Corporation (which was bought by ICE in 2009), to be sure ICE was the first mover and the first to develop CDS clearing with the major sellside banks,” said one clearing source. Even one of ICE’s competitors appeared perplexed by the EC’s probe. Dealers also point out that they would favour more competition in CDS clearing to avoid one clearer being able to charge whatever it wanted for the service. Other market participants highlight ICE’s first-mover advantage and substantial investment in risk management as justification for its pole position in European CDS clearing at present. In general though, shouldn’t they want banks to have preferential relationships with clearing houses if they want OTC markets to clear?” “If they want large European clearers not owned by Americans, then they should set out that ambition. “The EC’s move has greater significance because of this general move to shifting OTC trading to exchange clearing,” said a senior manager at a credit advisory firm. Some observers have linked this case to the failure of any European firm to break into the CDS clearing market, speculating that politicians are not wild about the prospect of Atlanta-based ICE continuing its domination. Participants also gave little credence to the allegations of the second probe, which is examining whether ICE granting preferential tariffs to nine banks had the effect of locking them in the ICE system to the detriment of competitors. “Once they delve deeper, they’ll realise there is much more provision of data,” said the CDS trader. But participants pointed out that there were numerous other sources of CDS data ranging from companies such as CMA Datavision to inter-dealer brokers. The probe alleges that 16 investment banks and Markit may have colluded or may hold and abuse a dominant position in order to control financial information on CDS. The first probe is a prime example, according to some market participants, of regulators getting the wrong end of the stick about CDS market practices. I think politicians are just trying to find a way to create an issue in the CDS market and bully the banks.” “I’ve never had any issue to complain about the market valuation process. “I don’t really know where these allegations are coming from,” said one senior credit hedge fund manager.
#DATO SEGURO EC SERIES#
Not all are so sanguine, though, fearing the probes are the latest in a series of regulatory assaults on the CDS market, which is also the subject of EU legislation regarding naked short sales. Provided this isn’t a witch hunt, the more the powers-that-be spend time looking at how this market functions, the more they will get comfortable with it.” “One of the big problems CDS has had is around bad PR and people not understanding it. “I think this could actually be positive for the CDS market,” said one senior CDS trader at a US bank. However, dealers and buyside firms alike believe the probes merely demonstrate a severe lack of understanding of CDS markets among European politicians. The potentially damaging allegations involve how CDS information is processed by investment banks to data provider Markit and whether the fee structures used by ICE Clear Europe, a leading CDS clearer, are fair. LONDON, May 9 (IFR) - Market participants across the board have expressed a mixture of bemusement and apathy over two European Commission antitrust probes into the credit default swap market announced on April 29. (The following story appeared in the May 7 issue of the International Financing Review a Thomson Reuters publication)
0 kommentar(er)
