Talk:Credit default swap

message: * Buying and selling the indices can be compared to buying and selling portfolios of loans or bonds. 
* The indices trade at a fixed coupon, which is paid quarterly 
Buyer
* Is “long” the index similar to buying a cash portfolio
* Receives the fixed coupon quarterly
* Assumes the credit exposure, is exposed to defaults
* Is equivalent to selling protection
* Pays up front the accrued coupon (from start of quarter to buy date) because at the end of the quarter will be paid a full coupon
Seller
* similar to selling a cash portfolio, is Is “short” the index 
* exposure is passed on to another party, this position wins on defaults
* is equivalent to buying  protection
* Receives up front the accrued coupon (from start of quarter to sell date) because at the end of the quarter will pay a full coupon to the buyer
Source: 
www.markit.com/assets/en/docs/products/data/indices/credit-index-annexes/Credit_Indices_Primer_Mar_2012.pdf
"The indices trade at a fixed coupon, which is paid quarterly (except for EM which is semi-annual) by the buyer of protection on the index, i.e. a short index position, and upfront payments are made at initiation and close of the trade to reflect the change in price." --pretty tortured language but taken apart, step by step, begins to make some sense.
Rick (talk) 13:56, 31 May 2012 (UTC)
thread_title:  Interest Payments Need To Be Highlighted 

message: The first image in the article has chopped up non-sensical text in the caption. The edit that produced it is from Dec 2012 and was a delete of some images and mangling of the caption. User was IP address and produced only this single edit. Last version with images and captions before vandal/error. http://en.wikipedia.org/w/index.php?title=Credit_default_swap&oldid=525089821 and here it is after http://en.wikipedia.org/w/index.php?title=Credit_default_swap&oldid=526136963 Mavaction (talk) 21:15, 23 February 2013 (UTC)
thread_title:  Old vandalism or error 

message: The article asserts that sometimes CDSs will pay in the event of a downgrade. I see no evidence for this in the cited source, although I would be happy to be proved wrong.  — Preceding unsigned comment added by 98.248.145.197 (talk) 17:52, 7 November 2011 (UTC)
thread_title:  Insurable Downgrade? 

message: http://www.nakedcapitalism.com/2008/10/initial-lehman-cds-auction-90-cents-on.html
this wiki page is fundamentally flawed, it lacks deeper references to warnings of the risk and dangers of CDS.
Absolutely right. This will be viewed in the future as nothing more than zeitgeist. This page should mention that it was written in 2008/2009 and should also mention that bank nationalisations and currency problems will in all probability result in CDS armageddon. (90.178.144.119 (talk) 22:35, 26 February 2009 (UTC)
replies: text: 83.135,  since your FT article was written in September  we’ve seen  huge CDS positions  involved with Lehmen and other events unwind without major incident.  Few  if any serious analysts Im aware of question that used properly CDS is a very efficient means of managing risk –so they can benefit everyone. I wouldn’t oppose further tightening of regulation on ‘naked’ speculation,  but it would be misguided to blame CDS alone for the current crises.  The root cause is much deeper - mis placed faith in the efficiency of the  free market.  Anyone is free to edit the criticism section and expand it,  but rebuttals are easy for us to find.  Im not defending CDS as ive capitalist sympathies, I hope my other edits show im very much on the economic left, and I haven’t worked in an investment bank for years.  There is no nefarious purpose among us defenders, editors just want to provide the public with an accurate balanced view. FeydHuxtable (talk) 13:25, 11 March 2009 (UTC)
thread_title:  CDS = Ponzi Scheme ? 

message: This article might need some text about insider trading (and other aspects of missing regulation) of CDSs in the article. I mean situations, in which somebody with insider information of a forthcoming credit event buys protection from said event. I think this is a big issue in the CDS market.
Reiska 15:24, 3 August 2007 (UTC)
replies: text: Anyone with access to insider information usually is supposedly restricted in their ability to transact on it anyway, but even if they do, so what? It's a good thing, isn't it? They've transmitted information to the external market, which will cause other people to be more wary of that company because of the higher spreads. Tristanreid (talk) 17:22, 13 June 2008 (UTC)
replies: text:  No - because the CDS market is not regulated by the SEC as the stock/bond markets are, traditional insider-trading laws do not apply. Trades don't even have to be reported / sent through a clearinghouse!  —Preceding unsigned comment added by 173.177.74.19 (talk) 09:12, 13 December 2010 (UTC)
thread_title:  Insider Trading 

message: What about credit risks associated with CDSs themselves? What if the risk seller goes bankrupt after the buyer has paid a lot of premiums? What is the status of the CDS agreement in bankruptcy proceedings? Are there any precedents?
Reiska 15:24, 3 August 2007 (UTC)
replies: text: Generally you require the counterparty to post collateral to make up for the difference in the current and market premia. The problem is that this isn't enough to completely ameliorate the counterparty risk, and it also adds the problem of a short-term cash shortfall to make collateral calls (which is the problem with any unfunded asset) Tristanreid (talk) 17:39, 13 June 2008 (UTC)
thread_title:  CDS Agreements in a Bankruptcy 

message: I guess the CDS will usually be handled like any other item in case of a default. If it has positive market value (protection buyer pays 50 Bp, while current fair value credit spread is only 30 Bp.) the CDS will probably be sold and will continue on. OTOH if it has a negative value (either because of a default or because current credit-spreads are wider) the protection buyer would simply receive its quota.
However, CDS trades are usually not done without CSA (ISDA Credit Support Annex) to limit counterpart risk by margin calls.
194.166.212.120 18:13, 22 August 2007 (UTC)
thread_title: Comment2

message: It makes sense that the cost of ensuring a weak credit might be 140 ( Philippines for example ) and a weaker bank such as Lehman (cost 110). But what price should a cds with lehman be for philippines? Ive got two risks, Phil AND Lehman. Given spreads are similar probability of default must be similar. If lehman were to go bust before Philippines Id lose my hedge and it may cost me a lot more to replace the contract with someone else. If Phil goes bust the I get my protection unless Lehman then go but as a result (cant meet payements on default). But its not just Lehman, banks in general. It is not true that banks are too big to fail, look at Continental Illiois or Northen Rock? It doesnt seem to make any sense for bank paper to trade close to risky credits as that would imply that they are both as risky. Whats the point of ensuring yourself with an entity that is just as risky? Im sure Northern Rock didnt trade CDs (did they?), but what price would you pay NR to ensure you against other companies defaulting? Nil?
:Generally you require the counterparty to post collateral to make up for the difference in the current and market premia. The problem is that this isn't enough to completely ameliorate the counterparty risk, and it also adds the problem of a short-term cash shortfall to make collateral calls (which is the problem with any unfunded asset) Tristanreid (talk) 17:39, 13 June 2008 (UTC)
thread_title:  What about deteriorating bank risk? 

message: In the example given under speculation, I don't quite understand why the premium on the CDS would be $100 000.Zain Ebrahim 09:50, 7 September 2007 (UTC)
thread_title:  Question on 2nd example 

message: Are rating downgrades recognized credit events?  —Preceding unsigned comment added by Gonzen (talk • contribs) 13:55, 19 October 2007 (UTC)
replies: text: Good question. I'll check and get back to you. If I were to guess, I'd say that there's nothing stopping two counterparties entering into such an agreement. Zain Ebrahim (talk) 22:15, 30 April 2008 (UTC)
replies: text: Yes, downgrades are credit events. And while two counterparties can enter into any agreement they want, CDS are generally well defined by ISDA agreement. The advantage is that the contract becomes liquid, they can use another contract to unwind the first. Tristanreid (talk) 17:24, 13 June 2008 (UTC)

text: No, downgrades are not (ordinarily) credit events. PIMCO and others list the most common events on their investor page: basically, debt default, failure to pay on time or unfavourable debt restructuring. The ISDA says that downgrades are only a credit event in ABS, and only in the case of a downgrade below CC (which is pretty much the sign of an impending default anyway). -- Marcika (talk) 08:19, 7 August 2008 (UTC)

text:  This could be merged with the first comment on this talk page. 80.169.48.109 (talk) 10:13, 11 May 2012 (UTC)
thread_title:  Recognized Credit Events 

message: I've removed the previous edit about CDS trading at par, which is not necessarily the case for cash bonds, because this is alluded to in the preceding sentence about the basis arising from "technical minutiae". Pls feel free to revert my changes or, better yet, provide a list of the technical minutiae that result in the basis. Finnancier (talk) 15:36, 3 January 2008 (UTC)
thread_title: Technical minutiae

message: Just a thank you to the editor, who explained in nice basic terms, the cash flow construct of a CDS transaction between two parties. Helped me understand the concept and logic behind the contract better than many textbooks could! 86.42.229.49 (talk) 23:22, 8 January 2008 (UTC)
thread_title:  The hedging example 

message: Good writing but how are the values in this example calculated? propably obvious but wuold be good to show the calculateions in verbatim format...192.100.116.143 (talk) 11:46, 30 January 2008 (UTC)
replies: text: The calculation appears to be in error.  The loss to the holders of the bonds would be $600 million if they had not purchased a credit default swap, and $0 if they had purchased a credit default swap.  The loss to the credit default sellers would be $9.6 billion as there are only $1 billion in outstanding bonds that can be sold for $40 cents on the dollar. Pringle1972 (talk) 19:29, 25 September 2008 (UTC)
replies: text: You make a good point, but you're assuming that none of the insurers have any coverage themselves, and that none of the insurers are insuring each other, OR that all insurers of insurers will also default at the same time as the bond issuer. The first case is an unlikely one because CDS sellers buy other CDS's to hedge the risk they have assumed on the first one. Why would someone buy the insurance if they don't have any exposure to the underlying bond? That's the only way $10 billion of contracts would have been generated under the conditions of the first case - 9/10ths of the buyers would be paying to insure bonds they aren't even exposed to. Even in this case, they won't lose the full notional value, they will lose he premiums paid. In the second case, where everybody including all the CDS sellers defaults all at once, the losses are still limited to premiums paid plus the unrecoverable bond. In both cases, the total losses wouldn't exceed $6 billion, because in the first case we don't assume that insurers default, and in the second case the defaulting insurers don't lose the value of the commitment they defaulted on. --99.163.50.12 (talk) 17:59, 28 September 2008 (UTC)
thread_title:  The hedging example 

message: I cleaned up the opening section and added a ref. Any comments? Zain Ebrahim (talk) 23:26, 30 April 2008 (UTC)
replies: text: We need to update this page, post haste! AIG's failure due to its huge credit default swap debt, as well as the sheer scale of this whole mess, has made it incredibly important in the US and global economy. For one thing, the amount of CDS debt now is not $45 trillion, but $70 trillion! This has the potential of bringing down the entire economy, if the whole thing goes balls up. Saukkomies 11:20, 18 September 2008 (UTC)
thread_title:  Opening section 

message: I came here after seeing an item on BBC2's Newsnight, hoping to get some clarification in plain English about what Credit Default Swaps are.
I was totally disappointed.
Anyone who can explain to a layman what is going on, given the enormous sums of money involved, will be doing me a favour. No-one who didn't already know what "CDS" meant would not leave this article much wiser.
cannon—Preceding unsigned comment added by Cannonmc (talk • contribs) 
:Could you perhaps clarify which part of the first paragraph confused you? A pays B regular payments and B promises to pay A a large sum if C defaults. Please read the first paragraph again and tell us which part of it you find confusing. Thanks, Zain Ebrahim (talk) 08:34, 7 August 2008 (UTC)
replies: text: You know what? Your second sentence is the most comprehensible explanation of this I've seen yet. Why can't some derivation of this be the lede? As it is it attempts to take in too many synonyms, and the post at the beginning of this thread is the result. Daniel Case (talk) 18:53, 28 September 2008 (UTC)
replies: text: That's pretty close, but B often also promises to pay A a series of smaller sums if C is in trouble, and D is responsible for deciding if C is in trouble and just how much trouble it is in.  Edward Vielmetti (talk) 21:46, 28 September 2008 (UTC)
replies: text: Ah ... so it isn't quite as simple as a game of chicken between lender and third party over whether the borrower will default. Still, we should get this in the lede. Daniel Case (talk) 04:26, 29 September 2008 (UTC)
thread_title:  Incomprehensible 

message: Can anyone supply a history of this product? Probably some form of CDS can be traced to the Champagne Trade Fairs of the 12th-13th centuries; their 21st century, thermonuclear application needs elucidation.
teneriff (talk) 19:51, 21 September 2008 (UTC)
replies: text: sorted! The word on the street is the idea was first conceieved during on one of Morgans Corporate Jollys. I couldnt find a web reference for that , and Im not sure theres any need to name the individuals most responsible, but at least this article should name the Bank that introduced the product.  FeydHuxtable (talk) 18:02, 2 November 2008 (UTC)
replies: text:  try william s. demchak and blythe masters, both JP Morgan. http://www.guardian.co.uk/business/2008/sep/20/wallstreet.banking?gusrc=rss&feed=business and http://www.portfolio.com/views/columns/wall-street/2008/10/15/Credit-Derivatives-Role-in-Crash#  92.192.72.67 (talk) 11:01, 19 November 2008 (UTC)
thread_title:  History Needed 

message: I read the first paragraph, and my eyes glaze over.  Can this be rewritten in english please?  esp. a version of english designed to enlighten and not to confused.  Edward Vielmetti (talk) 06:48, 27 September 2008 (UTC)
thread_title:  weasel words 

message: This article must be getting lots of views from people who want to know why CDS keeps being talked about as the systemic risk that threatens the entire global financial system, and justifies the unprecedented actions of the U.S. Treasury and Federal Reserve. The existing descriptions of Buffet's criticism and of the amplification of the risk associated with some specific liability aren't enough information nor enough scope to address this. --99.163.50.12 (talk) 18:44, 27 September 2008 (UTC)
thread_title:  Financial WMD's? Global systemic risk? 

message: Under Criticisms: "company X may have $1 billion of outstanding debt and $10 billion of CDS contracts outstanding. If such a company were to default, and recovery is 40 cents on the dollar, then the loss to investors holding the bonds would be $600 million. However the loss to credit default swap sellers would be $6 billion." This statement of the loss to the CDS sellers ignores the CDS coverage that virtually all these sellers have against loss. I believe the net loss is still only $600 million. The whole reason that $10 billion of CDS contracts are outstanding is that each CDS seller is likely to turn around and purchase another contract for their own coverage. Yes, in case of a default, somebody is going to lose $600 million, but it its't going to be multiplied 10 times after all these insurers cover each other. If I'm wrong, then this section needs citations that I can go look at, which show why the net loss gets magnified. I believe that it's only true in the case when everybody defaults: the original bond seller and all the sellers of the CDS contracts. And even if that happens, I believe the losses would be limited to unrecoverable bond debt PLUS whatever CDS premiums were paid by the buyers. Furthermore, the $10 billion of CDS contracts aren't all outstanding to the company that issued the bonds - they're outstanding to many other parties in addition to some held by that company. I'm'a change that. --99.163.50.12 (talk) 17:22, 28 September 2008 (UTC)
thread_title:  Bad example - only tells half the story 

message: The introduction should be written in such a way that it is intelligible to the non-specialist. Right now it reads like a legal contract. A bit of plain English in the body of the article would be welcome as well.Wwallacee (talk) 08:04, 2 October 2008 (UTC)
replies: text: Thanks for the input. Have a look at the opening sentence now. Please tell us what you think. Zain Ebrahim (talk) 09:11, 2 October 2008 (UTC)
thread_title:  Better introduction needed 

message: I made yet another stab at rewriting the lede.  It probably needs another few lines, and a few more references, but essentially it's accurate and unambiguous.  Edward Vielmetti (talk) 04:51, 6 October 2008 (UTC)
replies: text: Yes, this is much more readable while it still maintains accuracy. I like it. I was just wondering if we could replace "specific credit event named in the contract" with "specified credit event". The former seems tautologous. Zain Ebrahim (talk) 11:45, 6 October 2008 (UTC)

text: Updated that one sentence in the lede.  We need at least two more sentences there, one that ties this instrument to current events, a second which links to an additional section to be written on risks associated with inability to fulfill terms of the contract.  Edward Vielmetti (talk) 15:48, 6 October 2008 (UTC)
thread_title:  Rewriting the lead 

message: In Credit default swap#Operational issues in settlement I red-linked and then tagged "single-name" with clarifyme. Does it mean counterparty risk (also not clearly explained in wikipedia), for example in the sense that the single counterparty (say another bank) in a single transaction may fail to settle the transaction? Or in the sense of a single mortgagor defaulting? I found it mentioned here in this google-accessible book:
 Pricing and Hedging Interest and Credit Risk Sensitive Instruments
 By Frank Skinner
 Published by Butterworth-Heinemann, 2004
 , 9780750662598
 288 pages
on page 275: "A single name credit derivative is one in which the credit risk of just one entity is traded" -84user (talk) 14:40, 6 October 2008 (UTC)
thread_title:  single-name ? 

message: thanks for noting this; I think this should be a section in the credit risk article, or perhaps it needs its own.
some quotes and citations:
a source:
The Handbook of Structured Finance
By Arnaud de Servigny, Norbert Jobst, Norbert Josef Jobst
Contributor Arnaud de Servigny, Norbert Jobst
Published by McGraw-Hill Professional, 2007
, 9780071468640
785 pages
says on p 18 that single name exposure may be
* repetition of a given corporate name in numerous portfolios
* presence of the same server in multiple deals
* high dependence on the cash flows generated by a single entity
this is contrasted with "pool exposure".   note that some part of the fiction of credit derivatives is the notional independence of the underlying instruments, and the more single name exposure you have, the less this fiction stays true.
an article on the topic: http://www.risk.net/public/showPage.html?page=96530
also note that the more mergers and acquisitions you have, the more you get single name exposure.  
also also note that in the world of computer networks the similar concept is route diversity, and you get similar sorts of unpredictable systematic shocks when get you things like an earthquake wiping out a bunch of "diverse" routes that all happen to go through cables that go through one part of the ocean floor off Taiwan.
Edward Vielmetti (talk) 17:07, 6 October 2008 (UTC)
replies: text: "Single name" in the CDS context means purely that there is one single reference entity. This distinguishes such a contract from multiple-name (e.g. basket or portfolio) or, especially, index trades (e.g. on iTraxx or CDX indices). It has nothing to do with counterparty risk.--DerivMan (talk) 23:16, 10 October 2008 (UTC)
thread_title:  [[single name exposure]] 

message: I see that the current opening sentence of this article explains the concept that much better. For a subject so much in the news of late, this is good.
However, I have an idea. I'm thinking of sitting down with Inspiration tonight and making a simple diagram to use in the lede. Anybody else for this? Daniel Case (talk) 18:16, 7 October 2008 (UTC)
replies: text: Yes please do. What kind of diagrams had you in mind? Personally I would like to see one that links house loans to CDSs. Maybe one that shows the relative size (maybe pie charts?) of these big numbers I see in pages 5 and 3 of 2008-115a.pdf below: "Net current credit exposure for U.S. commercial banks decreased $59 billion, or 13 percent, in the second quarter to $406 billion." (does not seem too bad) and "The notional amount of derivatives contracts held by U. S. commercial banks in the second quarter increased by $1.8 trillion, or 1%, to $182.1 trillion." (so large?) -84user (talk) 08:42, 10 October 2008 (UTC)
replies: text:  There is no link between home loans and regular CDS. (Well, all these thing are linked somehow, but no direct link.) There is a link between home loans and CDS on ABS, and the ABX index, because those are CDS on asset-backed securities (or an index of them in ABX case), where the asset-backed security is essentially a pool of mortgages. But that's a different market to regular corporate CDS.--DerivMan (talk) 23:21, 10 October 2008 (UTC)

text: I think such a diagram would be quite useful. Are you thinking something like the ones we see in textbooks with a block for A (buyer) and a block for B (seller) and a block for C (ref ent) and arrows from A to B (regular payments) and an arrow from B to A (contingent claim upon C's default)? That would be quite helpful - go for it! Zain Ebrahim (talk) 15:40, 23 October 2008 (UTC)
replies: text: Yes, exactly. Daniel Case (talk) 08:56, 15 November 2008 (UTC)
thread_title:  Better lede, but let's illustrate it 

message: I agree we need more on the "History of these instruments", and would like to see at least a table showing the size of market over time. I just added the stub section Credit default swap#Auctions hoping to fill it with a short table of the major auctions, but I found (being a complete newcomer to CDSs) a dearth of information. I looked at the Bank for International Settlements (http://www.bis.org/) but could see nothing on past and planned future auctions. There's meant to be one today. Where is it described? Anyway I hope others can flesh that section out. -84user (talk) 08:20, 10 October 2008 (UTC)
thread_title:  Auction history 

message: The first, large scale single name trades that I saw were in Italian government risk (there was a tax reclaim for non-Italian investors with a risk that was generally mispriced) - executed by Morgan Stanley and other investment banks in around 1993.  But the documentation was weak. The first single name CDS trades that were recognizably ancestral to the current product were executed by Bankers Trust shortly thereafter. They were also doing first to default baskets on Japanese bank names in early 1994, as I recall. At Chemical Bank we managed to do CDS trades in 1994 (with no input from J P Morgan).
By the way, the earliest collateralized loan obligations are archived on Google News from 1985; the first use of credit derivatives in a portfolio CLO is supposed to be the Glacier Finance trade by SBC Warburg Dillon Read (International Financing Review 6 September 1997); the first public Bistro deal by J P Morgan was months later (International Financing Review 20 December 1997), so I suspect the main innovation by J P Morgan was the super senior swap in its Bistro structures.  
I'm sorry I don't have really cool citations for the early history of the single name CDS apart from my memory, but if someone has access to archives of "Derivatives Week" then there's a reasonable chance of finding relevant material there. Paulkozo (talk)  —Preceding undated comment added 05:14, 22 January 2010 (UTC)
thread_title: Origins and early history 

message: Interesting blog regarding derivatives 
Credit default swap exposure:
OCC's Quarterly Report on Bank Derivatives Activities 
OCC’s Quarterly Report on Bank Trading and Derivatives Activities 
Second Quarter 2008 
A Good article a Rense 
—Preceding unsigned comment added by 88.106.139.81 (talk) 04:23, 11 October 2008 (UTC)
thread_title: Derivative Exposure

message: I am trying to improve my understanding of these CDS so that I might make improvements in either text or diagrams on the above article. Can an expert comment on this following fictitious example?
Company C wants to borrow a million dollars to develop and market a new radio. Bank B agrees to give C a loan, the credit instrument, to be repaid in five years.
Bank B wishes not to risk losing all that money (because it would then be unable to repay its depositors), so it makes a contract, the credit default swap, with Insurer S. Bank B will pay S annual premiums for five years. In return S will, in the event that Company C fails to repay the loan, pay Bank B the money owing from the outstanding loan. In the event that Company C fails, Bank B must also give the credit instrument (the loan) to Insurer S, so that S can possibly recover some part of the loan (from what remains after the liquidation of C). Alternatively if Company C does not fail, then after five years C will repay the loan to Bank B, and Insurer S will no longer have the potential liability of paying out. In this case, Bank B will have paid a stream of premiums and S will have earned that same stream. 
I believe this describes an insurance use of a CDS and ignores the speculative use where Bank B buys a CDS without having any loan to insure.
Here are my questions. Some answers I suspect but would not like to assume.
*Is this CDS an instrument "made" by the seller and passed "over the counter" to the buyer in exchange for a complementary contract that agrees to pay the annual premiums?
*Does the seller require sight of the credit instrument that is being insured? And is it marked on the CDS in some unique way? If not, what prevents S from selling multiple CDSs for the same loan? Is it possibly  true that the legislation allows this latter case?
*How do seller and buyer keep a record of them? Are they only recorded by the two parties or are they also registered somewhere else?
*Must the seller keep sufficient capital in reserve to pay the buyer? What is this reserve ratio, if any, or is there no regulation at all?
*Would a bank ever sell its CDS if Company C still owed it money from the loan? I guess not, unless another insurer, X, offers a cheaper insurance (maybe C's credit rating improves, or X wishes to take a greater risk). Does this happen?
*A difficult political question: why have the US and UK financial leaders said practically nothing about CDSs? Are they not as big a problem as is made out?
That ends my questions on the insurance use of a CDS, but I am still puzzled as to what happens to all those CDSs that were sold and bought speculatively (without the buyer holding a credit instrument).
For example, I occasionaly see comments (on wikipedia and on BBC blogs), hinting that (a) a CDS sold without adequate reserve should be deemed illegal and that (b) a CDS unattached to its physical credit instrument should also be deemed illegal (in the sense of treating them as unenforceable gambling debts I suppose). I am very curious if this has been discussed in any serious depth.
I welcome any light cast on any of the above! -84user (talk) 14:10, 16 October 2008 (UTC)
replies: text: * These instruments, in the United States were specifically deregulated in the Commodity Futures Modernization Act of 2000, (passed as an un-debated  amendment to a budget/appropriations bill in a lame-duck session of Congress, in the last days of the Clinton administration) -- and CDSs are specifically defined as  not  insurance--hence not subject to U.S. state insurance laws. State laws on insurance (because of a couple of hundred years of experience with  insurance company defaults) are very specific about what practices may be permitted in insurance contract.  The linked article about the law is very incomplete as of this date. Generally the CDS market industry follows standard contracts promulgated by the International Swaps and Derivatives Association. Those contracts require participants to put up collateral based on the counter-party's credit rating. American International Group, for example because of its previously outstanding credit rating, did not have to put up collateral, or minimal collateral for its contracts, and when its credit rating was reduced, suddenly it needed billions of dollars to put up as collateral for its credit-default-swap counterparties. Because of the non-regulatory stance of the Federal law, the two parties can agree to whatever they want to--there are no requirements, but there are customarily many aspects of these standard contracts that agree to the kinds of  "requirements" you ask about.  The Federal law on the topic is rather likely to change in the coming year or two, after the new Congress arrives in Washington.  -- Yellowdesk (talk) 02:08, 17 October 2008 (UTC)
thread_title:  How to explain [[Credit default swaps]]? 

message: When a collection agency buys a defaulted credit card account from a bank, can that be considered a CDF?  Are they insured against that account not being paid off, when the bank has determined that it's unpayable?  If that is the case, could it also be considered insurance fraud and/or be subject to racketeering laws?  --Coyoty 23:37, 26 October 2008 (UTC)
thread_title:  Are collection agencies using credit default swaps? 

message: Is the Buffett quote really necessary?  There's nothing specific in there about CDS; that stuff should be in the full article on derivatives. 198.240.128.75 (talk) 11:27, 29 October 2008 (UTC)
replies: text: I always thought he was talking about CDS's when he said that. But a (very) quick google search indicates he was talking about derivatives. The Berkshire annual report (from the references section) isn't opening for me - what does that say? If it doesn't mention CDS's specifically, it shouldn't be here. Zain Ebrahim (talk) 12:01, 29 October 2008 (UTC)
replies: text: Just had a look -  "Charlie and I believe Berkshire should be a fortress of financial strength – for the sake of our owners, creditors, policyholders and employees. We try to be alert to any sort of megacatastrophe risk, and that posture may make us unduly apprehensive about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."  So about derivs in general not credit derivs.  Worth some discussion on the counterparty risks inherent in the cds mkt though. 198.240.128.75 (talk) 12:46, 29 October 2008 (UTC)
replies: text: I dunno, I think it would be better to leave that at Derivative (finance)#Criticisms where it's already mentioned. And maybe link to that section from the criticisms section here (something like "See Derivative (finance)#Criticisms for a more general discussion of criticism of derivatives."). Buffet was specifically referring to derivatives after all. Fwiw, Zain Ebrahim (talk) 13:29, 29 October 2008 (UTC)

text: Thirded.  First, it doesn't read well.  An exclamation mark?  Really? Secondly, the suggested course of action in light of counterparty risk seems a bit  Martingale-esque .  Perhaps someone more financially gifted might want to give it a crack? MasonicDevice (talk) 18:53, 23 February 2009 (UTC)
thread_title:  Criticism Section 

message: This entry should be scrapped.
I came here to try to learn more about credit default swaps. This page is no help unless you already know what they are.
It is so filled with insider jargon as to be unusable by an outsider. It would be nice if someone could write in plain English (to be translated into plain other languages) exactly, concisely, cogently what credit default swaps are.
I suspect this is an impossible task as the people who created the mess don't appear to have understood what they were doing so how are they going to explain it to anyone else.
Meanwhile this whole entry adds nothing to wikipedia or its users as it is totally incomprehensible.
A phrase from my schooldays occurs - "bullshit baffles brains". Well, this seems to be the former, it doesn't baffle my latter but it does annoy me because it doesn't add to knowledge.  —Preceding unsigned comment added by Cannonmc (talk • contribs) 14:53, 1 November 2008 (UTC)
replies: text: I hope you are inspired to do it. Remember, Wikipedia encourages Wikipedians to WP:BEBOLD--gargoyle888 (talk) 12:55, 7 December 2008 (UTC)
replies: text: Well, I was bold and my addition was deleted by Campoftheamericas with the note "no deleting of information please", but I did not delete information, I mostly just reworded what was there to make it more accurate.  The description section is ridddled with inaccurate information.  CDS contracts are not on the bond or loan level, they are on the entity/capital tier level.  The last paragraph of that section is also a bit inaccurate and misleading as that is not really how they are quoted in the market.  What I replaced it with was much more accurate as they are quoted in spreads below 1000bps and upfront for ones that trade over 1000bps (CDS were quoted exclusively in spread in the beginning, so some documents which are just a few years old will not mention upfront pricing).  Also the example was a bit confusing as it talked about the CDS terminating and then some other stuff and then doubled back around to settlement which is not chronologically correct and can confuse people new to CDS.  Can we have a discussion on this so that this article can represent CDS more accurately?  I feel there are many areas of this article that are not up-to-date as the CDS market changes constantly.--Terets (talk) 22:11, 20 December 2008 (UTC)
thread_title:  Let's (rather let you) start again 

message: Im not sure we should be "crediting" specific individuals with inventing the CDS.   Having spoke with industry insiders Im fairly sure that Blythe was neither the one who first conceived this product or even the one heading up the team that developed it, although she was a leading member. Granted some articles from fairly reliable sources name her as the inventor,  but I think she just gets singled out as for a banker she's relatively well known and interesting.  
If we are going to name an individual we should try not to be unfairly negative.  IMO crediting an individual with developing  CDS is highly negative publicity as (rightly or wrongly) they are seen by many as a chief cause of the current financial crises.  So I added a reference to the Criticisms section where Masters defends the CDS to present the other side of the argument.   However if other editors agree its best not to mention Blythe I support these references being removed. FeydHuxtable (talk) 13:21, 6 November 2008 (UTC)
replies: text: * Crediting someone with creating CDS is incredible positive publicity.  They're one of the most important innovations of the last decade.  Oh, and everyone in finance knows that blaming CDS for the current crisis is a complete joke. 198.240.128.75 (talk) 16:30, 6 November 2008 (UTC)
replies: text: Alan Greenspan , until recently the world's most powerful man in Finance, has conceded   CDSs and the lack of regulation on their use partly caused the crises.  Granted many in Finance would agree with you and I have some sympathy  myself which is partly why I added a reference defending the CDS.  A key point here is this is a public encyclopaedia -  recent high profile press and TV broadcasts mentioning CDSs have blamned the CDS, hence in the wider world the inventing CDSs is not something to boast about.  Blythe is already highly respected within Finance, IMO she doesn't court wider publicity which is why I'll soon remove mentions of her name unless anyone objects, as stated its probably incorrect that she invented the product.  FeydHuxtable (talk) 18:42, 6 November 2008 (UTC)
replies: text: * Not much about CDS in that article - seems like comments taken out of context to me personally.  There should absolutely be stuff in the article about recent criticisms; so long as a balanced picture is given.  And yes, doesn't make sense to say one person 'invented' the CDS; it's a simple concept so one person can't have been responsible for its wider acceptance IMHO. 78.149.159.106 (talk) 00:44, 7 November 2008 (UTC)

text: Hi,  In general I agree , but in this case if you compare the two citations in the conception section which name Blythe, the Guardian one where they’ve clearly been in contact with her directly suggests she was part of the team that developed CDSs , rather than the individual who originally conceived the idea.  Given recent publicity a few individuals might regard the inventor of CDS most unfavourably, which is why I don’t think we should single out an individual especially when the best available sources seem to suggest that is incorrect.FeydHuxtable (talk) 19:48, 13 November 2008 (UTC)
thread_title: Naming people?

message: I moved the reference to this from Conception to the Description section.  IMO its correct to suggest a link,  but Im fairly sure the conception of this product was motivated only by a desire to create profitable instruments for JPMorgan, at worse if one takes a cynical view to create weapons for their completion with other banks.  The developers would have considered practical matters concerning regulation, but not theoretical considerations relating to fiat money – IME even senior folk in finance rarely think in that sort of abstract terms. At best the link with fiat money may have influenced the legalisation of the product. FeydHuxtable (talk) 20:08, 13 November 2008 (UTC)
replies: text: I've taken the liberty of deleting this altogether, as it appears to be random conspiracy waffle. (The wikipedian justification is that the claim is unsourced, and not NPOV).  —Preceding unsigned comment added by 87.74.125.205 (talk) 20:34, 13 November 2008 (UTC)
replies: text: Thanks. Campoftheamericas  , I agreed with you but 125.205 is justified in removing the addition alltogether, as the article you linked to didn't make a connection with CDS.  For it not to count as Original Reasearch you need to find a Wikipedia:Reliable sources that explicitly suggests a link between fiat money and the CDS. FeydHuxtable (talk) 20:45, 13 November 2008 (UTC)
thread_title: Fiat Money

message: A sentence was worded like this: "CDS contracts have been compared to insurance, because the buyer pays a premium, and in return receives a sum of money if a specified event occurs. However, this is a slightly misleading comparison because the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event." I took out "this is a slightly misleading comparison because" and someone put it back. I don't think it is the purpose of Wikipedia on its own to say that something is "slightly misleading." This has to be in a quoted source. I happen to agree it is misleading, but I don't think we are writing essays in which we say such things.--JohnnyB256 (talk) 00:30, 15 November 2008 (UTC)
replies: text:  Fair enough.  However CDS's are not the same as insurance, so comparing the two in the first paragraph is misleading, and attention should be drawn to this.  What do you think of the current edit?  78.145.23.13 (talk) 16:02, 15 November 2008 (UTC)
replies: text: It's fine. The value judgment "misleading" is what I objected to. It IS misleading, but we can't say that unless we are quoting somebody.--JohnnyB256 (talk) 16:15, 15 November 2008 (UTC)
thread_title: "Slightly misleading"

message: I agree that there needs to be a wider range of viewpoints on this. In looking at the citation, I see that they are predominately from industry related entities. I see few citations from academia or regulatory sources. These sources do exist in spades. 
Regarding the Insurance Definition Hysteria... CDS's are a form of insurance (Per Webster: Insurance: a means of guaranteeing protection or safety). I have to ask why it is so important that CDS's not be viewed as a form of insurance? The best way for a layman to understand it is via things he is already familiar with. The point is to create understanding, right? 
Racerxy (talk) 18:54, 10 January 2009 (UTC)
replies: text: They're only insurance if you're using them to hedge a risk you have exposure to.  If you're long a credit and you offset that by shorting the credit using CDS, then the CDS position is analogous to insurance.  If you're not long the credit in the first place, then shorting the credit using CDS is just a speculative investment, not insurance. Bond Head (talk) 23:11, 10 January 2009 (UTC)
replies: text:  Sources seem fine to me - mostly FT articles (ie the press).  Industry-related links seem to mostly be for factual data. 78.32.72.252 (talk) 00:54, 24 January 2009 (UTC)
thread_title:  Clarity 

message: Is there a website where you can find current prices for CDS for the major companies and countries? MMMMM742 (talk) 14:05, 24 April 2009 (UTC)
thread_title:  Prices 

message: The standard model for CDS valuation (well actually the new standard, since it is a slight variation of the JP Morgan Model) has recently been open sourced, see ISDA CDS Standard Model.  —Preceding unsigned comment added by 62.47.231.208 (talk) 12:52, 2 August 2009 (UTC)
thread_title:  Valuation 

message: I curious about typical durations for a CDS.  In particular, as I understand it, large amounts of money are tied up as collateral for CDSs issued before the 2008 crisis that now have much higher spreads. When does that cash free up? It seems like something the article should mention.--agr (talk) 15:10, 5 August 2009 (UTC)
replies: text: Five-year CDS are the most liquid (typically), but the collateral requirements are deal-specific. Assuming the deteriorating financial condition of the company to which the CDS pertains does not improve, then the collateral posted would be "freed up" after expiration.  —DMCer™ 03:11, 29 October 2009 (UTC)
thread_title:  Duration 

message: Removed the following from Criticism section:
Credit default swaps lower the yield on bonds since owners of credit default swaps will accept a lower bond yield knowing that they have insurance on the default of that bond. This harms small investors unable to buy credit default swaps because bond yields are lower as bonds are priced with the insurance value of credit default swaps included.CDO Surge Squeezes Deutsche Bank, Vanguard Bond Funds, Bloomberg. February 6, 2007. Accessed 10-19-09.
This criticism misrepresents the referenced material and is incorrect. If a bondholder hedges the credit risk of their position by buying CDS on the underlying bond, the counterparty (CDS seller) takes on that credit risk. The net exposure to the credit risk therefore remains the same and is transferred from the CDS buyer to CDS seller. Corporate bonds are not priced to include the protection of a CDS (they would be priced to yield the risk free rate if this were true).
The article referenced asserts that the demand for leveraged corporate credit risk exposure through CDO issuance caused an imbalance of sellers vs buyers of CDS protection on corporate bonds. The existence of more sellers than buyers forced CDS spreads tighter which forced bond yields down due to arbitrage opportunities. The notion that the existence of CDS on its own causes spreads to tighten is wrong because the net credit risk exposure remains the same regardless of how many CDS contracts are written on the underlying bond. The holder of that net exposure will demand adequate compensation for the credit risk. The criticism could be that the opacity of the structured securities hid the true credit risk from investors and therefore forced spreads to levels too low for the risk involved but this would be a criticism of CDOs, not CDS.  —Preceding unsigned comment added by 66.162.207.242 (talk) 22:41, 26 January 2010 (UTC)
thread_title:  Criticism - Tightened Credit Spreads 

message: As a data point CDS spreads are quoted with act/360 Day count convention. Therefore technically the examples are incorrect. - With a quoted spread of 500 Bp. on $10 Mio. protection buyer is going to pay a premium of 10000000 x 0,05 x 365/360 = USD 506944 (for a non-leap year) instead of USD 500000. However readability would suffer. How about mentioning this somewhere in a foot note?  —Preceding unsigned comment added by Blahfasel (talk • contribs) 14:33, 18 April 2010 (UTC)
thread_title:  Day Count Convention 

message: I am new to the discussion page but have diligently been revising the CDS text.
A change was made to the last paragraph in the lead  
from: 
Credit default swaps are not traded on an exchange and there is no required reporting of transactions to a government agency.  This lack of transparency is of concern to regulators as is the trillion dollar size of the market that may pose systemic risk to the economy. [cites to SEC testimony and journal article]
to:
Credit default swaps are not traded on an exchange but all transactions are confirmed in the DTCC Trade Information Warehouse, and are subject to regulatory trade reporting requirements, just like any other derivative or security trade.
the reason stated for this change was that (Removed incorrect statement that cds do not have any reporting requirements.)
I have looked and feel the person who made that change Is incorrect.  DTCC does have a info warehouse and in March 2010 agreed to let regulators have freer access to  that data base.   the DTCC press release is here:  http://www.dtcc.com/news/press/releases/2010/data_release_policy.php.
That is voluntary access by DTCC; it is not required by law, although there is talk by regulators to require it. see this FT article: http://www.ft.com/cms/s/0/f1787bca-37af-11df-88c6-00144feabdc0.html   I believe my statement remains true -- although I have no idea what "regulatory trade reporting requirement" encompass. As the FT article indicates, EU officials were in the dark about aspects of Greek CDS.   PLus, I think the revision does not address that a) lack of transparency and b) sheer size, give regulators great pause. That credit default swaps are reported "just like any other derivative" may be true but it understates my point.   However the existence of the Trade Warehouse is an important development worthy of note.
I plan on melding the two thoughts but wanted to give others a chance to comment.  Web cites would be helpful so I can better understand your reasoning.  
sincerely, 
ctk56
Ctk56 (talk) 02:21, 20 April 2010 (UTC)
replies: text: I am reasonably certain you are correct.  I am not aware of any regulatory mandate that requires parties in a CDS transaction to report their trades anywhere.  In fact, this is one of the reasons why speculators in the credit markets prefer to trade CDS over, say, corporate bonds, which do have a trade reporting requirement.  (There are other reasons, of course.)  If I'm wrong, some please reference the cite. Bond Head (talk) 00:31, 21 April 2010 (UTC)
replies: text:  All investment bank trading desks report ALL TRADES to their regulators.  For example in the UK (where I work) the Financial Services Authority receives reporting of all trades done, whether OTC or on exchanges.  It is simply incorrect to say that CDS do not have reporting requirements.  Now whether the regulators have the tools to interpret the reports is another matter....!  86.14.122.94 (talk) 12:28, 25 April 2010 (UTC)
replies: text: reply to 86.14.122.94 that seems inconsistent with DTCC own press releases (march 2010) saying it will give regulators greater access to data base as well as commentary by IMF and CFTC(march 2010) citing need for more transparency. if authorities received reports of every trade, the market would be transparent.  your thoughts?         can you provide a url that supports claim??  thank you.  Ctk56 (talk) 12:19, 26 April 2010 (UTC)

text:  That may be true in the UK, but I'm pretty sure there's no similar rule in the US. Bond Head (talk) 01:04, 28 April 2010 (UTC)
thread_title: reporting requirements

message: it is very interesting and rich  —Preceding unsigned comment added by 84.109.234.81 (talk) 18:06, 30 May 2010 (UTC)
thread_title:  excellent quality article i don't think it requires clean up. 

message: It is probably against wikipedia policy as 'original research' to include it without sources though it's also common sense so I don't know it may be even possible to just add it (unless sources are found anyway,it's probably easy since it's so common sense). It's basically that: true, Credit Default Swaps' prices may reflect at least partly the real market in relation to a third party reference entity (e.g. a Country) but, what is obvious and common sense is that if the clients of such products have access to Media that overwhelm the reference entity (e.g. Soros VS little Greece) then the price may be manipulated. This is particularly easy in this case since the reference entity may be a completely separate party (seller or buyer distanced). --Leladax (talk) 15:44, 8 July 2010 (UTC)
thread_title:  This is an obvious counterargument against CDS (that may need sources to be exposed) 

message: Neither of the parties - buyer or seller - has to have any personal risk whatsoever on the failure of a country. So a powerful propagandist can get on TV and speculate against a country for the benefit via CDS and neither of the parties buying or selling CDSes would have any personal risk involved when it goes to failure of the country. This is insulting, a scum and ultimately a casino mafio tactic with a good obscure name for deceiving the masses. --194.219.254.51 (talk) 01:14, 4 August 2010 (UTC)
replies: text: Insurance is still the best metaphor, for better or for worse. And there's really nothing wrong with speculating against a country. 67.246.176.132 (talk) 01:08, 1 November 2010 (UTC)
replies: text: It is definitely not insurance since you are being insured of nothing. You can be either the seller or the buyer of the product and have absolutely no relation with the target of the product, making it fair to call it marginally gambling. The paradox is by not calling it insurance they get away with several restrictions involving insurance but since its even more wild in character it should have even more restrictions. --194.219.30.211 (talk) 21:16, 15 November 2010 (UTC)

text: I agree that insurance is not a good way to describe CDS. Credit default swaps are not insurance. But speculating on sovereign credits is definitely not "a casino mafia tactic" and is not intended to "deceive the masses." Bond Head (talk) 14:40, 1 November 2010 (UTC)
thread_title:  It's insulting calling this product insurance in the article. 

message: From my understanding it is basically an insurance you pay for on a month to month basis to insure your stock(s) so that if you lose a lot of money on stock(s) the insurer will take the fall instead of you.  —Preceding unsigned comment added by 76.115.202.154 (talk) 03:41, 26 January 2011 (UTC)
thread_title:  Simplified 

message: Like so many Wikipedia articles, this has been written by authors that already know (or purport to know) what the subject is about. This is an article that is entirely useless for a layman (aka, ordinary person) who wants to know what a credit default swap is.
Cannonmc (talk) 14:52, 8 April 2011 (UTC)
thread_title:  If you understand this article, you don't need it 

message: on many, many articles, wikipedia does quiet well.  on many financial articles, though, it appears that we have the 'too many cooks spoil the broth' effect. the article appears to be very, very disorganized, and written in very confusing language. am i wrong? am i just imagining things? Decora (talk) 22:52, 17 April 2011 (UTC)
replies: text: You're totally correct.  Unfortunately, all the people smart enough to actually understand this stuff (myself included) are too busy working to spend a week cleaning up these disorganized articles and rewriting them from scratch.  --Coolcaesar (talk) 22:54, 17 April 2011 (UTC)
replies: text: you don't have to be smart. all you have to do is care about your reader. everything else comes from that basic principle. i dont think this stuff is that complicated. I think Kurt Vonnegut once said that any scientist who can't explain what they are doing to a 7 year old is a fraud.  Decora (talk) 23:17, 17 April 2011 (UTC)
thread_title:  why is wikipedia so bad at financial articles? 

message: on this article, we have four, count them, four separate introductory paragraphs. I just have to ask myself, who wrote the last one? did this person not see that there were already three other paragraphs, saying almost exactly the same thing, already in the article? what was the point of adding that fourth one? did these people think they were improving the article? can someone explain this thought process to me? i am truly, truly baffled.   Decora (talk) 23:17, 17 April 2011 (UTC)
thread_title:  four intro paragraphs 

message: While it might have applied when it was added, the "too technical" tag seems unreasonable now.  The layman can generally understand the subject from reading the summary.  The article becomes more technical further down, but only gradually.  Compared to the typical Wikipedia untagged article on math or science -- or cricket -- this one is a model of clarity. — J M Rice (talk) 18:13, 12 November 2011 (UTC)
thread_title:  Removed "Technical" tag 

message: This section makes the case that CDS is not insurance based in large part on circular arguments (it isn't insurance because it isn't regulated like insurance) and on what seem to me to be very insignificant differences.  It seems that this section is trying to convince people that it isn't insurance when, really, it essentially is. Please see the "credit default insurance" section of this talk page.  I recommend that instead of insisting that it is not insurance, simply state how it is different from other insurance operations.  And change the title of the section to something like "Comparison to insurance" or "Analogy to insurance."  It seems to me that the purpose of this section is to convince people that CDS should not be regulated like insurance.  Thanks for considering my comment.  — Preceding unsigned comment added by 198.82.19.55 (talk) 16:44, 25 April 2012 (UTC)
replies: text: As no-one else seems to have commented since April I've changed the title to Differences from insurance.  I've also removed the NPOV flag because the content does not seem biassed or circular to me, but feel free to reinstate it if I've not addressed your concern?  Servalo (talk) 11:53, 14 October 2012 (UTC)
replies: text: I concur with your revisions, although I should point out that our anonymous commenter above obviously has no idea what insurance actually is.  Insurable interest is an essential component of insurance because it is what distinguishes insurance from naked gambling.  This is one of the most basic ideas understood by everyone who actually brokers or underwrites insurance policies, or who adjusts claims for insurance companies.  --Coolcaesar (talk) 18:16, 14 October 2012 (UTC)
thread_title:  NPOV Dispute- Not insurance 

message: ---Here's a layman's explanation in everyday terms.
Alex gets a new bicycle for his birthday. His brother Bob wants to borrow it for a week, which Alex does not want to do; but their mother Martha makes him do it. 
Alex says to Martha "Ok: But if Bob wrecks it, then you have to buy me a new one." Martha replies "Fine, if you'll wash the dinner dishes every night for the week."
Here Alex has done a CDS with Martha. The seller is Martha; the buyer is Alex; and the reference entity is Bob.
If Bob returns the bike safely, then Alex has lost a little by having had to wash the dishes for a week.
If Bob returns a wrecked bike to Alex, the credit event, then Alex stops washing the dishes on that day and gives the wrecked bike to Martha, Martha buys him a new bike on that day, and she has the wrecked bike to repair and resell or to throw away as she decides.
---Can this be extended to a naked CDS between brother Charlie (it's not his bike) and father Fred?
Brother Charlie says to father Fred "If Bob wrecks the bike, will you buy me a new bike too?" Fred replies "Sure, if you mow the lawn for a week; and it will depend on how badly it's wrecked." Here Charlie has bought a naked CDS from Fred, called "naked" because it's not Charlie's bike.
If Bob returns the bike safely to Alex, then Charlie has lost a little by having had to mow the lawn for a week.
If Bob returns a wrecked bike to Alex, then Charlie stops mowing the lawn on that day and Fred buys him a new bike on that day. But Charlie must pay to Fred the value of the wrecked bike, for example the difference between its resale price after repair and how much it cost to repair it.
--115.70.36.162 (talk) 23:34, 27 April 2012 (UTC)
replies: text: Nice idea, however the purpose of Wikipedia is to present facts, not to teach subject matter. WP:NOTTEXTBOOK--Hu12 (talk) 00:58, 15 May 2012 (UTC)
thread_title:  Very basic introduction for the layman 

message: This is a very dry article.  It's full of 'what' but there is no 'why'.  I think it would be beneficial to intro readers if the advantages and benefits of credit default swaps were spelled out.  I think that would allow a lot of people understand why there are periods of prolific use of credit default swaps.  One documentary (first episode of Money, Power and Wall Street, Frontline PBS, 12:01 in) spelled it out as a tool to bypass the regulations requiring a bank to set aside capital when issuing a loan.  This may or may not be true (I'm not an expert) but it's very difficult to figure out why they came into play in the world markets. SeanEsopenko (talk) 19:18, 27 June 2012 (UTC)
thread_title:  List Advantages and Benefits 

message: This article is missing from its description why a bank would engage in a credit default swap. I have no additional citations than offered above, but the benefit to a bank was to open up their ability to lend more money, in essence creating money by passing the responsibility for their debt to someone else. This essentially created a false economy worth trillions of dollars, much of which was directed toward risky real estate. Our current "recovery" is impossible because there was no real economy as strong as what we thought existed in 2008. It was money fabricated through CDS. These days banks must back their debt and are hoarding money to do so, as a result much money is not in general circulation.   PushHardly (talk) 14:07, 12 May 2014 (UTC)
thread_title:  Agree. Need Why Banks Did CDS 

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thread_title:  External links modified 

message: Hello fellow Wikipedians,
I have just modified 3 external links on Credit default swap. Please take a moment to review my edit. If you have any questions, or need the bot to ignore the links, or the page altogether, please visit this simple FaQ for additional information. I made the following changes:
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*Added  tag to http://www.dfs.ny.gov/about/speeches_ins/sp0811201.pdf
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thread_title:  External links modified 

message: Is it possible to have a quote for CDS contracts, for example on the ICE Exchange?  — Preceding unsigned comment added by 80.246.130.38 (talk) 18:07, 24 July 2018 (UTC)
thread_title:  Quotes for CDS  

message: Whoever wrote the Uses section is a god-damned genius. Props to the editor(s) 03:49, 24 March 2020 (UTC)
thread_title:  Props to the editors