Does anyone know who holds the risks of CDS?
ISDA and the Bank for International Settlements take market surveys to increase the understanding of the volume of CDS activity and the value of the contracts. Banking supervisors, and other financial regulators in each country, oversee and limit the risks taken by those they supervise, including the risks of exposure to counterparties on CDS and other credit products. As a result, the exposures of systemically important institutions to credit default swaps are known, both by the managers of those institutions and by their regulators. Loans, most of which are made by banks, are subject to an analogous supervisory framework. The Depository Trust and Clearing Corporation’s Deriv/SERV Trade Matching & Confirmation service is the industry standard for processing new trades and post-trade transactions for credit default swaps. It integrates with the Trade Information Warehouse to maintain the “gold record” (the official legal record) and current status of derivatives contracts.
