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Chicago Mercantile Exchange Leads Credit Default Swaps Market Race

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The race for rights to set up a regulated and exchange-based market for credit default swaps is being led by CME Group , but the final decision will be a trade off between urgency and politics.

The $55 trillion market, vilified as a major contributor to the current financial crisis, is heading for much tighter regulation and a number of exchanges are vying for a piece of this potentially lucrative business.

Aside from CME, which runs the Chicago Mercantile Exchange, rival pitches have come from the derivatives arms of both Deutsche Boerse (DB1Gn.DE: Quote, Profile, Research) and NYSE Euronext (NYX.N: Quote, Profile, Research), as well as a promising joint venture between IntercontinentalExchange (ICE.N: Quote, Profile, Research) and The Clearing Corporation, which is owned by a group of major CDS dealers.

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