Standard Chartered Bank (China) has successfully concluded a Credit Default Swap (CDS) deal with Industrial and Commercial Bank of China on September 11 2017. The deal notional is 20 million yuan, the reference entity refers to the electric power industry and the tenor is one month. This is the first CDS deal done by a foreign bank in China.

Wesley Yang, head of financial markets of Standard Chartered China, says, “We are privileged to be one of the first batch foreign banks obtaining the Core Dealership licence of Credit Risk Mitigation Instruments in China. The licence will not only allow us to use the credit derivatives to help our clients hedge their credit risk; it will also enrich the participants in the China credit derivatives market and improve the market liquidity.”

“As one of the most important credit risk mitigation instruments, CDS is the most widely used Over-The-Counter credit derivative worldwide, well known for its high liquidity, pricing transparency, and its effective use to hedge the credit risk and mitigate the financial system risk. Although CDS is now at the initial stage of development in China, on the backdrop of supporting the real economy and encouraging the financial innovation by government, along with the further regulation improvement and market cultivation, we are very confident in the growth potential and prospect of CDS in China,” says Yang.

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