From DJ's eFinancial News:
CME weighing credit default swap futures
CME Group is looking to introduce futures tied to credit default swaps, people familiar with the talks said, a move that would put the Chicago exchange operator in direct competition with rival IntercontinentalExchange.Credit default swaps function like insurance for bonds and loans, and CDS index futures would do the same - protecting users against the declining creditworthiness of a basket of companies.ICE said in October it plans to list CDS futures in the first quarter of this year, following its decision to transition energy swaps into futures last year. CME in December launched interest rate swap futures.Efforts to list CDS on futures exchanges come as criticism has mounted since the 2008 financial crisis, where the derivatives were blamed for multiplying losses at large financial firms. Questions over the future of CDS have contributed to a drop in trading volumes, which now stand at $26.9 trillion outstanding, versus the $60 trillion peak of the CDS market in 2007.CME originally offered CDS futures in 2007, but they didn't trade and the contracts were de-listed in February 2009. A CME spokeswoman declined to comment on whether or not the company is developing a new product....MORE
