Credit Default Swaps Trading: What Changes to Expect

This Financial Insights report focuses on the most heavily traded and popularized derivative contracts - credit default swaps (CDSs). These instruments have played a major role in the financial turmoil that is currently ripping through global economies. The usages of CDSs have resulted in substantial losses for many financial institutions and brought on the demise of some.

According to Sean O'Dowd, senior analyst, Global Capital Markets, "Firms need to gain greater efficiencies in their risk, pricing, and processing practices for CDS instruments or have governments force their hands. Not making these changes only brings about increased exposure for firms that desperately need to get a handle on CDS portfolios as they try to clean up financially and move forward."