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CDS bill moves forward.

Last month I mentioned Congress's apparent determination to regulate credit default swaps (CDS), the most politically volatile derivative because of its role in the AIG debacle. Congressional regulation of CDS could have some significant impact on corporate sales of debt and company use of those swaps to protect themselves from defaulting suppliers. The House Agriculture Committee took the first step toward regulation on February 13 when it passed a bill (H.R. 977) that would require all CDS traded outside an exchange to be processed through a central clearinghouse regulated by the Commodity Futures Trading Commission (CFTC) or the Securities & Exchange Commission (SEC). The CFTC or SEC will also be able to suspend trading in CDS with the President's approval, but only in situations where the SEC has suspended short-selling in the underlying securities.
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Title Annotation:GOVERNMENT; credit default swaps
Author:Barlas, Stephen; Beresford, Dennis; Brenne, Gordie; Osheroff, Mike; Williams, Kathy
Publication:Strategic Finance
Article Type:Brief article
Geographic Code:1USA
Date:Apr 1, 2009
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