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Credit-Default Swaps: Wall Street’s Very Dark Market

Credit-Default Swaps: Wall Street’s Very Dark Market

While Apollo Management and the Texas Pacific Group were in supposedly secret talks to acquire Harrah’s Entertainment for $15.1 billion, the takeover already was a done deal in the market for credit-default swaps.

Traders in the swaps market somehow also divined that the massive $33 billion leveraged buyout of the hospital operator HCA was in the works, weeks before a consortium including Kohlberg Kravis Roberts and Bain Capital announced the deal.

Now that the suspicion of insider trading is increasing, regulators, who have thus far been mum on the $346 billion of unregistered credit-default swaps, might be forced to increase control over Wall Street’s most secretive market, says Bloomberg News.

There’s just one hitch: No regulatory agency takes responsibility for overseeing these financial instruments.

Read the article.

posted by Victor Lloyd Smith @ 3:09 PM