CME, Citadel give up on CDS exchange plans

This is hardly surprising. The CME Group and Citadel have abandoned their plans for a credit default swaps exchange services. Clearly, the big Wall Street dealers that dominate the CDS order flow have little incentive to move all their trading to a formal exchange, an idea that still seems to be backed by some in the government.

There is still an opportunity in the market. The CME Group and Citadel say they are still hoping to thrive in the nascent market for CDS clearing services. But even there, you have to wonder how they can overcome the IntercontinentalExchange, which has gotten off to a relatively fast start with its clearing service. the ICE, of course, is part owned by the top CDS dealers, and thus a large amount of order flow seems guaranteed. But CME and Citadel have lined up some big buy-side players, including PIMCO and BlackRock.  

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