Singapore Exchange Limited (SGX) and Dow Jones Indexes have signed a Memorandum of Understanding to pioneer the development of exchange traded credit derivatives contracts based on the Dow Jones TRAC-X indexes.
Credit derivatives – which enable banks to transfer credit risk from one party to another – are currently traded OTC. SGX reckons growing institutional interest in credit derivatives means there is room to create a 24/7 global network for trading them which will replicate the success of the Mutual Offset System link with the Chicago Mercantile Exchange.