Is the current turmoil a boon for exchange traded credit derivatives? - Part IV

As predicted, more and more points in the direction of credit derivatives being forced on to exchanges by the crisis. An excellent article in yesterday’s FT talks more about this. This renewed focus on counterparty risk is probably healthy but at the same time I am wary about too much regulation. Despite all the risks attached to the OTC credit default swap market, too much regulation might strangle the market right when it is needed. It will be interesting to see how the Freddie Mac and Fannie Mae defaults will affect the process, however. These defaults are far far larger than the previous record (Delphi) and it will be a challenge to get it all right. Maybe it will also be an important determinant in whether or not regulation will be an important player in turning the credit derivatives market into an exchange-traded one?