ISDA Paper on Proposed Liquidity Assessment for Single-name CDS

On September 5, ISDA submitted a paper to the European Securities and Markets Authority (ESMA) and the European Commission in support of its earlier response to ESMA’s Markets in Financial Instruments Regulation (MIFIR) review consultation package 4 (CP4) on transparency for derivatives. The paper argues that the proposed assessment of five-year single-name credit default swaps (CDS) that reference global systemically important banks (G-SIBs) as liquid, proposed in CP4 for the purposes of public transparency, is fundamentally flawed. It highlights that the methodology used to assess the liquidity of five-year single-name CDS referencing G-SIBs is markedly different from the methodology used to assess other derivatives and bonds and presents analysis that shows these instruments would be deemed illiquid if they had been assessed in a way that was consistent with other instruments. This is important, as it dictates whether trades in these instruments should be made public in real time or deferred. ISDA has consistently advocated that making trades in illiquid instruments transparent in real time places undue risk on liquidity providers.

Documents (1) for ISDA Paper on Proposed Liquidity Assessment for Single-name CDS

Paper on Enhancing Liquidity and Risk Management

As ISDA marks its 40th anniversary this year, it is an opportune time to reflect on the challenges and opportunities faced by the global derivatives markets over the past four decades. Rapid growth, continued innovation, regulatory reform, central clearing, margining,...

Trade Bodies Seek Delay on Third-Country CCP Rules

On October 21, ISDA and nine other trade associations – the Alternative Investment Management Association, the European Association of Co-operative Banks, the European Association of Corporate Treasurers, the European Banking Federation, the European Fund and Asset Management Association, the European...

ISDA and Tokenovate Launch CDM Taskforce

ISDA and Tokenovate have today announced the establishment of a new taskforce within the Fintech Open Source Foundation (FINOS) to accelerate operationalization of the Common Domain Model (CDM). The initiative responds to growing market demand for standardized, interoperable post-trade processing...