The International Swaps and Derivatives Association, the Managed Futures Association and SIFMA’s Asset Management Group announced that 25 investment management firms promised to begin voluntarily clearing their single name credit default swaps. No time frame was provided.
Compliance Weeds: Even though single name credit default swaps are securities under applicable law, they are most likely going to have to be cleared in a futures environment for some time. Only the Commodity Futures Trading Commission has set up a practical regime for the handling of such products—utilizing a cleared swaps account—subject to ordinary CFTC protections. (Click here to access January 14, 2013 order regarding the treatment of funds held in connection with CDS cleared by ICE Clear Credit.)