Citadel-Backed CDS Clearinghouse Gets Cold Shoulder

Mar 20 2009 | 2:08am ET

Despite its best efforts to steal a march on its rivals, Citadel Investment Group’s credit-default swap clearinghouse finds itself lagging behind.

CMDX, a joint venture between Chicago neighbors Citadel and the CME Group, won final regulatory approval last week and is ready to begin processing trades. But it lacks customers—any customers—and has yet to clear a single trade, Bloomberg News reports.

Meanwhile, its chief rival, the CDS clearinghouse run by the Intercontinental Exchange and backed by nine banks, including several Wall Street giants, cleared $7.15 billion in CDS last week, the first time the swaps have ever been processed by a clearinghouse.

When Citadel and the CME announced their plans in October, they aimed to get their clearinghouse up and running before the Wall Street-backed entity debuted. But the ICE won its regulatory approval a week before CMDX, and its backers, among them Goldman Sachs and JPMorgan Chase, are clearing their trades with the ICE.

A CME spokesman told Bloomberg that CMDX expects to begin clearing “in the coming weeks” and is in talks with several potential customers.

The Citadel-backed system is not the only CDS clearinghouse awaiting its first customer: NYSE Euronext has actually been ready to process the trades since December, but hasn’t found any takers for its services.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

Compelling Opportunities In The Alternatives Space

Jul 29 2014 | 9:33am ET

In an environment where many asset classes seem expensive by historical standards...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note