credit default swaps

Discussion in 'Retail Brokers' started by gsgs, Apr 6, 2011.

  1. gsgs


    is anyone trading them ?
    how is it being done ?
    what brokers support it ?

    I found this:

    > MarketAxess currently offers institutional market participants a full suite
    > of CDS electronic trading capabilities including CDS index trading, single name trading,
    > and bid/offer list trading.

    "institutional market participants"
    how do you become that ?

  2. gsgs


    OK, keyword search for "trading platforms for cds" gives :

    MARKETAXESS HOLDINGS INC - FORM 10-K - February 26, 201026 Feb 2010 ...
    the first disclosed client to multi-dealer trading platform for CDS indices;

    Start-Up Odex Builds Trading Platform For CDS, Reports Dow Jones ...11 Mar 2011

    CDS prices that is sourced directly from GFI CreditMatch™, one of the most widely
    used and highest rated trading platform for CDS.

    Responsible for deployment of CreditTrade Electronic Trading platform for CDS and
    bonds in London and Asia (based in Singapore in 2006) ...

    E*TRADE Securities Limited: Private Company Information - BusinessWeek
    The company offers online trading platform for CDS

    Trading platform - Plus500 Trading Platform.No Fees.

    CME Group has developing a clearing and trading platform for CDS in partnership with the.
    Chicago-based hedge fund Citadel

    1 Apr 2009... is talking with potential market participants and expects to launch a clearing and trading platform for CDS in the coming weeks. ...

    GFI Group and Macrobond Financial Team Up To Offer CDS Data16 Feb 2011

    Cawley had set up IDX Capital, a New York-based electronic trading platform for CDS between dealers

    A new wrinkle in the CDS automation race - FierceFinanceIT18 Nov 2008 ... TradeWeb this month launched an electronic trading platform for CDS indexes.

    Creditex founder Sunil Hirani discussing the coming of an e-trading platform for CDS indexes

    GFI joins Japan OTC clearing working group23 Jun 2009

    6 Jun 2005 ... Creditex's maturity as an e-trading platform for CDS

    16 Feb 2011... one of the most widely used and highest rated trading platform for CDS. We are pleased that Macrobond

    Ken Griffin proposed a very specific trading platform for CDS

    the first disclosed client to multi-dealer trading platform for CDS indices;. •,
    DealerAxess ®, an innovative dealer-to-dealer electronic trading platform

    In 2004 GFI introduced CreditMatch, an electronic trading platform for CDS and cash bonds.

    Finextra: marketaxess CDS index dealing system goes live12 Sep 2005... it had teamed with jpmorgan, Goldman Sachs and Morgan Stanley to launch an electronic auction-based trading platform for CDS indices. ...
    noodls® › gateway to facts | GFI Group and Macrobond Financial ...16 Feb 2011... one of the most widely used and highest rated trading platform for CDS

    6 Jun 2005 ... Creditex's maturity as an e-trading platform for CDS

    13 Oct 2008... Citadel Investment Group LLC Oct. 7 announced their plans to launch within 30 days the first-ever electronic trading platform for CDS.

  3. OP, have you taken a course in Stochastic Calculus?
  4. gsgs


    me ? yes. long ago. What' "OP" ?

    further link:

    CreditTrade ceo finds new home. Electronic trading platform operator MarketAxess Holdings has appointed Paul Ellis as head of MarketAxess

    Creditex and CreditTrade to Merge, Creates Credit Derivatives ...
    CreditTrade ( is a leading voice broker in the global credit markets, specialising in credit default swaps, indices and structured
  5. Joman


    You don't need to know Stochastics Calculus to trade vanillas CDS as you don't need to know Brownian Motion to trade options.

    However, the return is very low: you earn approximately 100 bps per year with an index like the iTraxx.

    This is interesting for institutions because this product is unfunded and we know they will be able to pay in case of credit event (or be bailed out :) )

    If it ever comes to the retail market, I'm sure they'll ask you to fund the notional of the contract and it becomes much less interesting.
  6. LeeD


    gsgs, if you are ready to dedicate $5 mln or so to credit default swap trading, ask any of the major prime brokers like Morgan Stanley and they answer most questions.

    One of the caveats of trading CDS is like with non-exchange-traded options they are a contract between a "buyer" and a "seller". There is no single market place like the exchange and you have to shop around. This also means you cannot buy CDS from one broker and sell to another (although brokers who work with CDS would stand inbetween the buyer and the seller for a fee so that both have the contract with the broker and not with each other).

    Hedge funds trade CDS on a large scale and we know hedge funds will not be bailed out.

    This forecast is totally unsubstantiated.

    With retail customers it would work similarly to how it works for hedge funds. The broker would offer CDS on margin similar to how margin accounts work with equities.

    Also think of put options. If the underlying company goes bankrupt with shareholder value wiped out, the equityprice will collapse to near zero. Nevertheless, from most options margins are far lower than the underlying equity price.
  7. gsgs


    why not an ETF (and options !) on an CDS-index ?

    so much volume, so important
  8. Joman


    Hedge funds trade CDS but their risk (the counterparty risk) is very closely monitored by banks and prime brokers as can be the health of a company.
    They won't be able to monitor the financial strength of an individual the same way.

    I'm not sure how CDS on a margin account could work:
    - they are fixed income products: can you trade bonds on a margin account and double / triple your return ?
    - With equities, your position is liquidated once you're account is below the margin level.
    - With CDS, once there's a credit event you can owe a lot of money if you sold protection and being margined is a huge risk.
  9. My .02 (present value may be less to some of you) is to never trade CDS unless it's on an exchange. I've read a lot on all the f*** you trades people like burry, paulson, lippman, etc made during the crash and ALL of them could be undone (and almost were) by a few simple things happening which would NEVER happen in exchange traded instruments like etf or 1256 cars:

    counterparty goes bust - this is like winning the state lottery for $15 billion and the state saying "sorry pal we don't have any money". This is why these guys used multiple counterparties.

    broker refuses to give you price b/c trade is going your way - this happened to burry. Some chick from GS did not return calls and pretty much pulled a shawshank (disappeared overnight) when the cdx index dropped. This is like you buying SPX 1330 puts today and tomorrow the index drops to 1000 and your screen still has the day old quotes. If someone pulled that crap GS did w/ burry I'd go all man on fire w/ them.