A clearinghouse for credit derivatives trading?
The severe stress in the credit derivatives markets since the inception of the subprime crisis has been reported in great detail in the financial press. Hitherto arcane CDOs and CDSs--collateralized debt obligations and credit default swaps--have become part of the popular vocabulary.
An important aspect of these markets is that these products are traded over-the-counter (OTC) in bilateral transactions between banks and other institutions. In this sense, they are fundamentally different from other financial instruments, such as stocks or equity options, which are mainly traded on exchanges.
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