The International Swaps and Derivatives Association (ISDA) announced that major industry participants have committed to the use of central counterparty clearing for CDS in the European Union (EU).
Nine of the leading dealer firms in the CDS industry have signed a letter to European Commissioner Charlie McCreevy confirming their engagement to use EU-based central clearing for eligible EU CDS contracts by the end of July 2009.
These efforts mirror the engagement the industry has made in other jurisdictions in the interests of a globally cohesive regulatory framework for clearing.
The letter also commits the signatories to work closely with infrastructure providers, regulators and the European Commission in resolving outstanding technical, regulatory, legal and practical issues. Each firm will make an individual choice on which central clearing house or houses might best meet its risk management objectives, subject to regulatory approval of any such clearing house in Europe.
"This commitment provides the basis for constructive dialogue with the European Commission, both on arrangements for central clearing and on related regulatory matters, said Eraj Shirvani, ISDA chairman and head of fixed income for EMEA at Credit Suisse. "ISDA and its member firms will continue to work closely with the European Commission, national and international regulators and infrastructure providers to ensure a sound and efficient regulatory framework for central clearing of the CDS market. "
The co-signatories of the letter are: Barclays Capital, Citigroup Global Markets, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS.