As derivatives exchanges and their clearing houses jockey for position in credit default swaps clearing, some exchange members are beginning to rebel, using the Nimby argument – “Not in my backyard”.
They view credit derivatives as “toxic waste” that could pollute and destabilise the hitherto stable infrastructure of the futures and options markets.
Last week, Thomas Peterffy, founder and CEO of Interactive Brokers, told Bloomberg News that CME Group’s plan to clear CDS using its existing clearing house could be a disaster.
“Mixing the two types of funds will jeopardise the entire financial system,” Peterffy said.
Executives from other CME users have also come out against the exchange getting involved in credit derivatives. They are taking the opposite view to exchanges such as...