Monoline insurers have changed the name of a draft template for trading credit-default swaps on asset-backed securities. The change, from End Investor Template to Form II, represents a compromise from the monolines, as dealers had said the name was misleading because the monolines are the only investors backing the template.
But the big differences between the insurers' template and the Dealer Template have not changed, and dealers said they will not trade on the monoline template, whatever its name. "It was a non-event," a dealer said, referring to a conference call last Thursday between monolines, dealers and the International Swaps and Derivatives Association. "No dealer has any interest in trading on that document."
The template--which the insurers produced in October as an alternative to the template dealers introduced in September (DW, 10/21)--outlines substantively different terms for defining and settling credit events (DW, 11/4). Dealers object both to its content and its name, and have refused to trade on its terms. "It is inaccurate to call it an End Investor Template," a dealer said. "There is no evidence that any other investor has supported this document."
The synthetic ABS market has ballooned this year, with trade volume far outstripping the cash market. Dealers said that by refusing to trade on the terms of the much more widely endorsed dealer template, monolines are being left behind.
Peter Poillon, a spokesman for Ambac Financial Group, which is leading the monoline effort, was not available for comment.
