"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