Tuesday, February 3, 2009

Latest DTCC CDS Update

Last week's significant net rerisking in consumer services has continued and has now spread to the basic materials and consumer goods sectors. The only sector which saw a notable derisking was financials, with $25 billion in net notional, or 5,546 contract increase. Net single-name notional did not change from last week at $1.4 trillion, however the reduction in gross single-name notional continues and has dropped by $200 billion to $14.2 trillion this week. A pronounced weekly reduction in gross notional occurred in the indices and index tranches, which dropped to $13.2 trillion from $13.8 trillion last week. In summary, the total gross of the CDS market keeps on declining and is now at $27.4 trillion from $28.1 trillion last week. At this rate CDS regulation will not be necessary as the market will soon cease to exist on its own.

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