The International Swaps and Derivatives Association held a conference call last Wednesday to discuss the loan-only credit default swap confirm, put together by a working group in the market. High on the discussion list was settlement procedure and despite the lengthy call, nothing was finalized. A follow-up call has not been scheduled yet.
One individual on the call said there was a long presentation on settlement mechanics and a long presentation on the history of the market. ISDA told participants they had received some last minute questions that it was going to compile and circulate, but did not elaborate. Some in the market are getting antsy for a document and speculated that trading may begin under the proposed document before ISDA gives final approval.
An ISDA spokeswoman said the association does not set specific dates for documentation projects to be finalized. She said there are a range of issues the group is working on, including loan settlement, that need to be addressed before the document is ready for use. She would not speculate on whether participants would choose to trade on the document while it is still in development.
In a release last week, Deutsche Bank said it has started active market making on LCDS. Currently only Credit Suisse and Lehman Brothers have traders dedicated solely to LCDS and the release did not specify whether Deutsche Bank would have a trader dedicated just to the product. A call to a spokeswoman at Deutsche Bank was not returned by press time.