Self -cleaning of the finish system: CDS funeral

The financial world is experiencing the most dramatic times of its update. The decision of the International Association on Swaps and Derivatives Association (ISDA) is not to recognize the actual default of Greece and not make payments on CDS (Credit Default Swaps) of the debtor country-may become one of the renewal significant points.

The ISDA solution is quite understandable, especially if you consider that representatives of banks - issuers of these financial instruments (Bank of America, Barclays Bank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Morgan Stanley and Morgan Stany and Morgan Sachs. etc.). They, as insurers, do not want to pay on an insurance event.

As a result, these very main representatives of the Western financial world freely or involuntarily become a funeral service for such an instrument as CDS.

In a professional environment, more and more votes appear in favor of the “Kidalovo”, made by “whales” of the market, will scare away investors from such an instrument as CDS, because what stupid you need to be to purchase this derivative after ISDA said that payment on accounts is not at all guaranteed.

Thus, CDS as a class of instruments can stop being in demand by market players, and these derivatives may well become history. At least until a clear legislative framework for their appeal is developed.

This case highlights the interesting side of the evolution of the financial market . At the beginning of the crisis, in 2008, many politicians spoke out in favor of a stronger regulation of the urgent market - too many uncontrolled derivatives have divorced it. Apparently, the situation has matured, and we are dealing with the first swallow of truly market regulation of the global financial system-without any regulators there. She herself (by the conscious desire of banks not to recognize the case of Greece by default and to bury CDS or by coincidence) is cleansed of excess instruments.

Apparently, the law of conservation also works in financial schemes, despite all sorts of multipliers there. Emitters are really not able to pay for all the derivatives they released. They were released for several dozen trillions of dollars, which is comparable to world annual GDP.