Only the Office of Thrift Savings disappearsI think the exemplarity and joint effortsIn London the FTSE 100 has dwindled by 0 Their failure is ours said Michel PatrySome professional experiences forge you more character than othersThe first reason of such gloom is in a word ratesIt hosts more than 6000 visitors each dayA centralized orders registerThis is not everythingWomen make their entry in the AfepMedef codeIt does not endanger economic recovery remains fragileIt is a Rothschild who said. "It prohibit CDS credit default swaps, Editor's note on sovereign debt." The categorical statement comes from the founder of the activist Atticus, Nathaniel Rothschild Fund, in an interview to the "Echos" published on February 22. Since this date, number of authorities have expressed positions that go in the direction of increased supervision of the marketing of these credit derivatives, supposed to cover against the risk of failure of a borrower. Starting with the Constable of the stock exchange us, the Securities and Exchange Commission (SEC), which indicated the week last be investigating possible destabilizing effects of speculation on sovereign CDS. Sunday, the economy Minister, Christine Lagarde, would: "I think that derivatives ..., the CDS, must be strictly regulated and capped or even prohibited." Yesterday Finally, a spokesman for the German Finance Minister called for a concerted on CDS, concluding regulation that a "solution must be found at the international level".
The origin of these successive statements: intense activity on the TOS of Greek sovereign securities markets. The notional volumes and the prices of CDS, measured in points, reached such a level in February that they could act on the underlying himself Greek bonds, and thus increase the cost of funding of the issuing State, already in trouble. In other words, the CDS could serve as a speculative tool, materialized as a private insurance contract to raise the interest rates associated with sovereign securities, adding the same time debt supported by Greece, Member of the euro area. What create envy charged with this financial instrument if few courteous toward the States.
However, the difficulties in regulating this market are many. The CDS on sovereign securities, as all other CDS, are traded over-the-counter between investors. They totally escape the supervision of the stock market regulators, whose main task is to monitor the activity of the regulated markets. These stays for the most part in the exchange of shares and bonds. Still young, it is shallow and controlled by a limited number of banks, of which the most famous three are Goldman Sachs, Deutsche Bank and JP Morgan, which, all, operating at the international level. Finally, insist many market professionals, the TOS are used instrument for useful coverage, even when they have underlying a piece of sovereign debt. They include cover against the variation in interest rates which affects the value of the bonds. At the time, they are a popular product managers and hedge funds in their investment bond strategy.
Complex process
The identity of the players, the size of the market and its impact on sovereign States show that it is an international issue, explains in Bercy. The services of the Department "work proposals in this area", indicates a close source of the Minister, "in the extension of those that were decided at the various g-20". For the time being, the world authorities agreed on one thing: the need to get the CDS standardized by a clearing house, to limit systemic risk. But standardization processes are very complex and still leave a large place to the CDS made on measure or "tailored-made". CDS which, in the overwhelming majority of cases, are denominated in U.S. dollars. A last limit requiring to agree at the global level in this market.
