DTCC Connection

Nov 01, 2011 • DTCC Connection

DTCC Promotes Market Transparency With New CDS Tables

by Craig Donner


DTCC’s Across the Pond information series, which provides regular updates on the latest financial reform developments in the U.S. and Europe, has expanded its content to include publication of weekly tables listing credit default swaps (CDS) contracts on the top 15 sovereign and corporate reference entities and top 15 percentage movers. The addition of the CDS tables in Across the Pond builds on DTCC’s ongoing efforts to promote greater transparency in over-the-counter (OTC) derivatives markets.


Excerpted from public data in DTCC’s Trade Information Warehouse (TIW), the tables are based on net notional values and provide a high-level overview of CDS exposure. The tables are a reliable resource for global market participants, regulators, government officials and journalists who track movements in the OTC derivatives markets.


“We have a wealth of data stored in the TIW that regulators use to help monitor and mitigate systemic risk in the OTC derivatives market,” said Stewart Macbeth, president and CEO of DTCC Deriv/SERV LLC. “We saw an opportunity to broaden awareness of this data resource, which is publicly available on our website, by pushing slices of it out to key constituents. The goal is to promote greater market transparency by helping ensure the public’s information about CDS exposures is accurate. The tables present the information in a concise, easy-to-read format.”


Widespread interest

The concept of listing the top 15 sovereign and corporate CDS grew out of conversations DTCC has been holding with regulators, legislators and media in the U.S. and Europe.


During meetings with officials, they often express interest in knowing the sovereign and corporate entities with the highest CDS exposure as well as which ones experience the largest movements week to week. In addition, the debt crisis in Europe has prompted widespread media interest on CDS exposure and market trends.


The data is broken into four tables that list the top 15 sovereign entities, top 15 corporate entities and top 15 reference entities (sovereigns and corporates) with the largest percentage movement compared to one week ago and four weeks ago. The tables also include historical data for comparison purposes and the total number of outstanding contracts.


“We are using net notional amounts for the rankings because they are a better indication of risk than the gross notional numbers, which represent the value of all active CDS contracts, including offsetting contracts,” said Macbeth. “Because the net notional numbers eliminate offsetting CDS contracts, they represent the maximum amount that would have to be paid in the event of a default by the indicated entity, which is critical information for understanding market trends.”


In the media


Media outlets have been among the most interested parties in receiving the CDS data. Since DTCC began distributing the tables in September, articles citing the data have appeared in The Wall Street Journal, The New York Times and Financial Times.


DTCC executives are using the tables in meetings with lawmakers in the U.S. and Europe to demonstrate the TIW’s global capabilities as new rules to govern the OTC derivatives markets are being developed.


“DTCC is committed to enhancing market transparency and ensuring data accessibility, and these tables allow us to reinforce that message with government and regulatory officials,” said Dan Cohen, DTCC managing director and head of Government Relations. “The positive response to this initiative underscores the growing recognition among stakeholders of the critical role that DTCC can play in a financial landscape that prioritizes transparency and risk mitigation.” @


[To receive the Across the Pond publication and/or the weekly CDS tables, please email dtccgovrelations@dtcc.com.]


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