An editorial in today’s Financial Times on the Greek debt situation contained this little gem:
“It is a false concern that triggering CDS may set off market contagion. The market is too small – and perverting the course of the swaps’ rules actually carries the bigger risk…”
To which we at ISDA say: Amen! We’ve been making similar points, and believe greater clarity about the CDS market is important, particularly as the Greek debt story continues to play out.
This story from CNBC will also help improve clarity. It outlines how the CDS credit event process works in a clear fashion. (One small note for viewers: the DC consists of 10 sell-side and 5 buy-side members).