The game of chicken being played by European Commissioner for the Internal Market and Services Charlie McCreevy and the CDS industry over central clearing in the EU seems to have come to an end with the industry having blinked first. The longstanding and increasingly ill-tempered dispute between the two over clearing has centred on whether there should be a global clearing house for CDS trades or whether there should be a separate European solution. CDS dealers feel that these contracts should be cleared on a global basis as the CDS market is a global market while the EU wants a separate regional clearing house that will be under its regulatory control (see Euromoney February 2009).
Having failed to get the industry to sign up to an EU-based CCP at the beginning of this year, McCreevy has made a number of public statements emphasizing his commitment to impose regulation on the market if it did not comply. Attempts by the industry to change his mind seem to have failed. As recently as February 3, Eraj Shirvani, Isda chairman and head of European credit at Credit Suisse, was quoted as saying. “The CDS industry is dedicated to its very clear and demonstrable commitment to centralized clearing for these products.
