Lack of CDS market on Greek bonds hinders risk management

A recent credit default swaps auction of contracts covering Greece's debt was successful, but trading in Greek CDS has remained on hold because of a contractual technicality. The situation has hurt the ability of market makers to manage risk. Traders are awaiting a ruling from the International Swaps and Derivatives Association on whether look-back clauses, which are typical in CDS contracts, can be used to reference the 9 March credit-event decision.

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