Monday, July 20, 2009

CDS Market Still in Trouble

I posted last week about increased regulation in the CDS Market.

The thought was, the more eyes on this market, the less liquid it will become.

Well...from the likes if this article.

It looks like the CDS Market has some more severe painful de leveraging in store.

AIG FP by themselves have more then 44,000 CDS contracts with a notional value of $2 Trillion out standing that the entity needs to either tear up, cross, and or settle....

....that it will take some time to settle these contracts.

Point of reference, LTCM needed 15 months just to unwind their trades which were valued at $1 Trillion, AIG's exposure is much more complex in nature.

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