CDS regulation battle.(PICK YOUR POISON)

The question of who will regulate CDSs remains unanswered, but the Federal Reserve Bank of New York (FRBNY), the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have agreed that CDS trades could be cleared by one or more central counterparties as soon as November or December of this year.

The three potential CDS regulators are reviewing risk management designs and other priorities with a goal of increasing market transparency.

"Where will those positions and funds be held?" asks Gary DeWaal, attorney for brokerage Newedge USA LLC. "We don't want to do anything that reduces the effectiveness of segregated funds in the United States, that is the paramount issue before the CFTC approves any clearing process." He explains that CDSs may require CFTC exemptions, much …