The International Organization of Securities Commissions (IOSCO) published a final report reviewing the global single-name credit default swaps (CDS) market in light of concerns raised during the March 2023 banking-sector turmoil about limited liquidity and transparency. IOSCO concludes the market remains illiquid and concentrated, finds no evidence of causation between sharp single-name CDS price moves and the subsequent sudden drop in the shares of certain global systemically important banks, and sees no indication that US post-trade transparency requirements have negatively impacted liquidity. The report compares post-trade transparency regimes across jurisdictions, noting that the European Union, United Kingdom and United States have transaction-level public dissemination requirements for single-name CDS to varying degrees, while surveyed jurisdictions including Australia, Canada, Hong Kong, Japan, Singapore and Switzerland reported no such requirements (beyond aggregated publication). It highlights that EU and UK publication is generally deferred (often T+2) given illiquidity, while the US regime provides near real-time dissemination and currently allows capped notional display for single-credit instruments at or above USD 5 million under an SEC no-action position. IOSCO’s analysis of March 2023 finds a surge in CDS hedging activity in a low-liquidity market, contributing to wider bank CDS spreads alongside falling equity prices, and sets out potential benefits and risks of greater transparency, including possible mitigation through exemptions, caps and deferrals. IOSCO encourages each member jurisdiction to take steps toward enhancing post-trade transparency for single-name CDS where it concludes this would not have a substantial negative effect on market risk exposure or market activity, and notes that suspicious activity can continue to be addressed through securities law enforcement regimes. The report is the output of Phase 1 of IOSCO’s two-phase work programme, with potential Phase 2 follow-up dependent on the Phase 1 outcome.
IOSCO 2025-11-25
International Organization of Securities Commissions issues final report urging members to consider stronger post-trade transparency for single-name CDS
The International Organization of Securities Commissions (IOSCO) released a report on the global single-name credit default swaps (CDS) market, highlighting its illiquidity and concentration. The report finds no causation between CDS price moves and the decline in shares of certain global banks during the March 2023 turmoil and notes that US post-trade transparency requirements have not adversely affected liquidity. IOSCO recommends enhancing post-trade transparency for single-name CDS where feasible and addressing suspicious activities through existing securities laws.