The Japanese market is looking into the possibility of bringing about cash-settled credit derivative trades this year. Credit-default swap settlement was top of the agenda at last month's International Swaps and Derivatives Association AGM in Singapore and looks set to be this year's biggest project globally (DW, 3/17).
"It's a global trend and market participants are discussing when or how this should happen in Japan," said a senior credit derivatives trader at a bulge bracket house in Tokyo. "I think this should happen since for some names there's more activity in the CDS than the bond, which could be problematic if there is a default."
ISDA's Japan credit derivatives committee is meeting in the next few weeks and will address the topic. "This will be the main issue under discussion," noted the trader.
