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Bank ‘oligopoly’ slows CDS clearing-BlueMountain

Reuters – Large dealers in the $26 trillion credit default swap market are blocking CME Group’s CME.N efforts to clear trades, in a bid to retain their "oligopoly" over the market, hedge fund BlueMountain Capital Management said on Monday.

Central clearing of CDS trades is viewed as imperative to removing risks associated with the potential failure of a large counterparty. Fears of margin losses helped spur a run on Bear Stearns Cos and Lehman Brothers and sparked government calls for mandatory clearing of standardized CDSs.

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