Calls for regulation of credit default swaps are mounting in Washington, and the next move could push the products on to futures exchanges and cleared platforms.
Christopher Cox, chairman of the US Securities and Exchange Commission, said on Tuesday that Congress should force CDS under the regulatory oversight of the SEC.
“The $58tr notional market in credit default swaps — double the amount outstanding in 2006 — is regulated by no one,” Cox said before the Senate Banking Committee. “Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market. This is an area that our enforcement division is focused on using our antifraud authority, even though swaps are not defined as securities, because of concerns that CDS offer outsized incentives to market participants to see an issuer referenced in a CDS default or experience another credit event.”
While the SEC is...