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Credit where credit’s due

The Credit Event Auction system was an inspired solution to the meltdown in the CDS market

In late 2008 a group of senior supervisors took a good, close look at how the credit derivatives market had stood up to the wave of events that had suddenly hit the market.

Senior regulators - most vocally the Federal Reserve Bank of New York - had been concerned for several years that the credit default swaps market might suffer severe disruption if a series of bankruptcies or other such events were to trigger a rash of payouts.

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