Investors parted on Friday in droves of shares in the largest German bank.
(Photo: dpa)
Frankfurt The sharp swings in so-called credit default swaps (CDS) by financial institutions in March alarmed bankers and financial regulators alike. The European financial market authority Esma is therefore now considering the consequences.
“We are examining whether there is a need for reform in the market for credit default insurance for individual companies,” Esma boss Verena Ross told Handelsblatt. This market is relatively illiquid. “That’s why market participants can move prices here with just a few transactions.”
With credit default swaps, investors can protect themselves against a company’s default. However, investors can also invest in these derivatives if they want to bet on a negative development at an institute.
Esma is still in its infancy in reviewing the CDS market for individual companies and cannot yet draw definitive conclusions, Ross said. Basically, the Hamburg native, who has been at the helm of Esma since November 2021, sees two main approaches: more information and more transparency.
Read on now
Get access to this and every other article in the
Web and in our app free of charge for 4 weeks.
Further
Read on now
Get access to this and every other article in the
web and in our app.
Further