mardi 27 octobre 2015

#Business: Inside the Secretive Circle That Rules a $14 Trillion #Market - #Finance #WallStreet

"Fifteen of the biggest players in the $14 trillion market for credit insurance are also the referees."

Firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. wrote the rules, are the dominant buyers and sellers and, ultimately, help decide winners and losers.

Has a country such as Argentina paid what it owes?
Has a company like Caesars Entertainment Corp. kept up with its bills?

When the question comes up, the 15 firms meet on a conference call to decide whether a default has triggered a payout of the bond insurance, called a credit-default swap.

Investors use CDS to protect themselves from missed debt payments or profit from them.

Once the 15 firms decide that a default has taken place, they effectively determine how much money will change hands. 

Full article: seven years after the financial crisis first brought CDS to widespread attention

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