"Today, in a 3,500 word oeuvre, the NYT's Louise Story has done an expose on some of the key development in the CDS market. For those who may not have the patience of reading the whole thing, we provide an abridged summary...
•The most profitable product for banks currently are derivatives (and CDS in particular)
•As a result, the derivatives trading cabal wants to contain its members to as few as possible, and to preserve the status quo indefinitely
•Margins on CDS can be anything as there is no central clearing or pricing mechanism; buyers and sellers rely on the broker to present an honest market
•The trading desk spread profit on a CDS contract is 0.1% of notional ($25,000 of $25,000,000)
•Spreads can be as wide as the banking cartel (Goldman, as most other banks just price at Goldman levels) deems them to be
•Banks do not want to trade CDS on exchanges as that would kill margins
•Citadel tried to make CDS trading into a HFT operation. It failed (for now)
•Markit is a dominant industry-controlled player, and prevents transparency (and thus keeps margins high) in the market by not allowing broad dissemination of CDS pricing
•Regulation is powerless to break the cabal's control..."
at http://www.zerohedge.com/article/secret-banking-derivative-cabal-redux-and-why-hft-cds-has-so-far-been-failure?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
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