pension fund, its risk of loss due to Risky Corp defaulting on the bond is eliminated. Retrieved July 2, 2012. 112 And, as noted below, the appropriate treatment for Naked CDS may be entirely different. 44 A bill in the.S. We believe that CME should be in a position soon to provide us with the information necessary to allow the commission to take action on its exemptive requests. Typical CDS contracts do not provide an internal mechanism for challenging the occurrence or non-occurrence of a credit event and rather leave the matter to the courts if necessary, though actual instances of specific events being disputed are relatively rare.
The Commodity Futures Modernization Act of 2000 created a safe harbor. 62 This created severe risk management issues, as counterparties were in legal and financial limbo. In this way, a CDS is similar to credit insurance, although CDS are not subject to regulations governing traditional insurance.
Archived from the original (PDF). Lanchester, John (June 1, 2009). There is currently a debate in the United States and Europe about whether speculative uses of credit default swaps should be banned. "Time to outlaw naked credit default swaps". Hull and Alan White. Visual Basic for Applications (VBA) is not trendy, properly speaking, in the financial industry. . "The Long Awaited Arrival of Credit Derivatives, DecemberJanuary 1997".