I have regularly commented, in this blog, on the issue of the credit crisis possibly forcing credit derivatives on to exchanges. For instance, already back in December 2007 I wrote ....I think the current turmoil in credit should strongly support, if anything, more contracts going to exchanges rather than the opposite (December 16, 2007).
A week or so ago we were taken one step closer to this actually happening. The banks involved in the trading of credit derivatives, which of course have tried to block the whole thing since they make tons of money trading OTC credit derivatives, finally agreed to the proposed plans to set up a EU-based clearing house for credit default swaps! All the major broker dealers seem to have accepted the ISDA plan and have agreed to start clearing CDS in Europe in July this year. Major news!
Now, a clearing house is not the same as an exchange but I still believe this is good news for the main derivatives exchanges. According to news reports, the exchanges Eurex, NYSE Liffe and IntercontinetalExchange are all trying to get their own pieces of the action and I think it is highly likely that the exchanges will be heavily involved in the clearing.
So, basically, I think we are getting closer to my prediction of exchanges profiting from the crisis-induced regulatory push in the direction of OTC clearing.