UPDATE 1-NY Fed to hold central counterparty CDS meeting Friday
(Updates with more details)
NEW YORK, Oct 10 (Reuters) - The Federal Reserve Bank of New York will host a meeting to discuss industry progress toward the creation of a central counterparty in the $55 trillion credit default swaps market, the New York Fed said in an email statement on Friday.
Calls for regulation and centralized clearing of credit default swap trades have gathered steam in the wake of Lehman Brothers' (LEHMQ.PK) failure last month.
Critics charge that credit default swaps are central to the spreading fears in markets and pose systemic risks, as the market's private nature makes it impossible to know the size of a counterparty's exposures and where they are distributed.
A central clearinghouse could remove the risk of a large counterparty failure.
There are several competing plans to launch a clearinghouse under way. But the Fed wants one clearing house to win widespread support, according to sources familiar with a similar meeting held earlier this week.
"The Federal Reserve does not endorse any of these specific proposals but is seeking to accelerate market adoption of central counterparty services," the central bank said in its statement.
Participants at the Friday meeting include four potential CDS central counterparties: Eurex, NYSE Euronext (NYX.N), CME Group CME.N /Citadel and IntercontinentalExchange (ICE.N) /The Clearing Corporation, the statement said.
Representatives of major dealers, buyside firms, the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission and the European Central Bank will also attend. (Reporting by John Parry and Chris Sanders; Editing by Theodore d'Afflisio)
