About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

US Regulators Pushing for Increased Pricing Transparency Around CDSs

Subscribe to our newsletter

US regulators have this week been highlighting the need for more transparency around OTC derivatives pricing, in particular around credit default swaps (CDS), which are now moving towards being centrally cleared in the market. Speaking in New York at an International Swaps and Derivatives Association (ISDA) conference, Theo Lubke, senior vice-president at the Federal Reserve Bank of New York, told delegates that the CDS market must act as a benchmark for other OTC markets with regards to pricing transparency.

The Fed uses CDS prices as a benchmark to assess market and credit risk, explained Lubke, and this means that transparency is of systemic importance in this space. He reckons a lot more needs to be done to improve transparency around the pricing of these instruments and soon: “The more CDS is used as a reference tool, the more important it is that market participants understand the pricing process.”

Moving CDSs and other OTC derivatives onto central clearing counterparties (CCPs), as suggested by the Obama administration’s regulatory overhaul proposals, is likely to improve pricing transparency to some extent. Indices on CDSs have already begun to be cleared by the CCPs currently operating in the market and this has indeed meant that pricing for these has been made publicly available. However, clearing on these CCPs has not yet been mandated by Congress and it will take regulatory approval for this to happen on a wider scale.

The goal of the regulators may be to mitigate counterparty risk in the OTC derivatives market but a side effect will be institutionalising pricing sources. Pricing feeds that are employed by the various CCPs will therefore give certain data providers the edge over others, although the need for financial institutions to provide best price to their clients will also add to the valuations data cause.

Congress is due to vote on these measures before the end of the year and the valuations vendor community will have to wait until then before it can judge the full impact of regulation on the space.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Address Emerging Operational Risk and Alleviating Data Blind Spots with AI Powered Risk Management

The digitalisation of financial services is in full flight, as financial institutions strive to offer the same levels of service and improved customer experience that consumer markets have enjoyed for some time. This digitalisation – providing seamless access to appropriate services on demand – requires great emphasis on client data. This changing digital landscape, and...

BLOG

Testing Industry Perceptions at Data Management Summit London

Every year at the A-Team Group Data Management Summit we take the pulse of the financial data and tech industry on a range of critical topics of the day. We do this through audience participation questions during the day-long event, urging delegates to interact with speakers and other participants via remote voting on salient questions....

EVENT

RepRisk Sustainability Breakfast Roundtable London

The London sustainability breakfast is part of the global roundtable thought leadership event series hosted by RepRisk in key markets, including, New York, Toronto, London, Frankfurt, Oslo, Copenhagen, Stockholm, Hong Kong and Singapore in 2026.

GUIDE

Regulatory Data Handbook 2019/2020 – Seventh Edition

Welcome to A-Team Group’s best read handbook, the Regulatory Data Handbook, which is now in its seventh edition and continues to grow in terms of the number of regulations covered, the detail of each regulation and the impact that all the rules and regulations will have on data and data management at your institution. This...