A Step In The Right Direction Against Counter Party Risk

Bloomberg is reporting this morning that some 2,054 entities have signed up to participate in a group which will oversee the credit default swap (CDS) market. CDS are the instruments (amongst others) that got AIG in trouble. Some of the big criticisms of such derivatives is the lack of standardization, oversight and clearing. CDS are not regulated products like stocks, bonds or options, but are are private contracts instead. There can even be disagreement between parties on whether or not a default of the underlying company really occurred.