Share on LinkedInShare on LinkedIn

ARTICLE · 14 JANUARY 2019

Short-Squeeze Risks Loom Again In CDS Markets

Jones Day
Jones Day
Contributor
Jones Day

Jones Day

Jones Day is a global law firm with more than 2,400 lawyers in 40 offices across five continents....

View firm profile
Explore more from Jones Day

The credit derivatives industry underwent a massive overhaul in 2009 as the ISDA implemented the credit default swap "Big Bang" to increase certainty, efficiency and uniformity in the global CDS markets.

United StatesFinance and Banking
Jones Day
Jones Day
Locke McMurray
Locke McMurray
Jayant W. Tambe
Jayant W. Tambe
Author LinkedIn connections

In Short:

The Situation: Fears of a potential short-squeeze in the upcoming Sears CDS auction have kicked off disputes in a variety of venues.

The Result: One of these disputes caused the fourth-ever convening of an ISDA CDS Determinations Committee external review panel and another made its way before the Sears bankruptcy court.

Looking Ahead: The CDS industry is now grappling with questions regarding whether the CDS auction rules should be changed and, if so, whether those changes should be applied prospectively or retrospectively.

The credit derivatives industry underwent a massive overhaul in 2009 as the International Swaps and Derivatives Association ("ISDA") implemented the credit default swap ("CDS") "Big Bang" to increase certainty, efficiency and uniformity in the global CDS markets. Two of the Big Bang's hallmark innovations were the establishment of the Credit Derivatives Determinations Committees (the "DCs") and the specification of an auction

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

SEC Advances “Responsible Retailization” Through A Potential Accredited Investor Exam And Potential Regulated Fund Reforms

On September 30, 2026, the Securities and Exchange Commission (SEC) issued two rule proposals and five notices aimed at expanding investors’ access to private markets. The package would add ways to qualify as an accredited investor, including passing a new exam administered by the Financial Industry Regulatory Authority (FINRA), broaden performance-based compensation and modernize regulated funds, including interval funds and business development companies (BDCs).
United StatesFinance and Banking
Proskauer Rose LLP
Proskauer Rose LLP
Article

New NYSE Delisting Rules: What Microcap Companies Need To Know About The $0.25 Minimum Trading Price

The SEC has approved new NYSE and NYSE American listing rules establishing a $0.25 minimum trading price, effective July 1, 2027. A single closing price below this threshold triggers immediate trading suspension and delisting proceedings with no cure period. Companies trading at low share prices must act now during the transition period to implement reverse stock splits and establish monitoring procedures before this hard floor takes effect.
United StatesFinance and Banking
Bevilacqua
Bevilacqua
Article

The SEC’s Proposed “Regulation Crypto Assets” Provides A New Framework For Regulatory Clarity

The U.S. Securities and Exchange Commission has proposed Regulation Crypto Assets, introducing two new exemptions from registration requirements and a safe harbor provision for investment contracts involving crypto assets. How will these tailored frameworks—the Startup Exemption for offerings up to $5M and the Fundraising Exemption for larger capital raises—reshape the regulatory landscape for digital asset issuers while preserving investor protections?
United StatesFinance and Banking
Winston Taylor
Winston Taylor
Article

SEC And CFTC Open Door To Tokenized Markets After Clarity Fails To Advance

The SEC and CFTC have issued coordinated regulatory relief measures that significantly advance crypto-based trading infrastructure in US markets, bypassing Congressional gridlock on the CLARITY Act. These orders establish new frameworks for tokenized securities venues and passive software providers, potentially reshaping how digital assets are traded and accessed in regulated markets.
United StatesFinance and Banking
K&L Gates
K&L Gates
Article

The Financing Problem Behind the AI Infrastructure Boom: What Lenders and Sponsors Need to Watch

As AI infrastructure spending surges toward $697 billion in 2026, hyperscalers and compute providers are increasingly turning to debt, structured financing, and GPU-backed collateral to fund expansion. While demand projections remain bullish, a critical timing gap is emerging between capital deployment and cash flow generation, creating significant risks for lenders, sponsors, and operators across the ecosystem.
United StatesFinance and Banking
Riveron
Riveron
Article

SEC Issues “Innovation Exemption” To Facilitate Trading Of Tokenized NMS Stock

The SEC has issued a groundbreaking Innovation Exemption allowing tokenized securities venues to facilitate trading of tokenized NMS stocks using automated market makers and liquidity pools. This temporary five-year exemption from exchange and dealer registration requirements establishes conditions for permissioned blockchain-based trading while granting public companies a 30-day window to object to third-party tokenization of their securities.
United StatesFinance and Banking
A&O Shearman
A&O Shearman
Article

Basel III Endgame Evolution: Banking Agencies Propose Major Capital Overhaul (Again)

On March 19, 2026, the federal banking agencies issued a package of proposed changes to the regulatory capital requirements for banking institutions of all sizes, from the largest GSIBs and super-regional banks to community banks (the “Proposed Rules”). This package of proposals is a second full attempt at implementing the 2017 “Basel III Endgame” international framework—following the agencies’ initial package of proposals in July 2023 (the “2023 NPR”)—to better reflect credit, trading and operational risk in the calculation of minimum regulatory capital ratios.
United StatesFinance and Banking
Simpson Thacher & Bartlett LLP
Simpson Thacher & Bartlett LLP
Article

HRSA Announces Updated 340B Rebate Model Pilot Program, Limited To Drugs Subject To A Maximum Fair Price (MFP) For 2026 And 2027

The Health Resources and Services Administration has announced a revised 340B Rebate Model Pilot Program for drugs subject to Medicare's Maximum Fair Price, expanding eligibility to manufacturers with selected drugs for 2026 and 2027. The program introduces new data requirements, dispute resolution mechanisms, and stricter compliance monitoring while addressing stakeholder concerns about administrative burden and program integrity.
United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
Article

Ninth Circuit Vacates CFAA Injunction Against Perplexity's Comet AI Agent

The Ninth Circuit Court of Appeals vacated a preliminary injunction against Perplexity AI, determining that when an AI agent acts at a user's direction, it is the user—not the AI company—who "accesses" computer systems under federal and California computer fraud statutes. This landmark appellate decision addresses how existing computer-access laws apply to agentic artificial intelligence and has significant implications...
United StatesMedia, Telecoms, IT, Entertainment
Jones Day
Jones Day
Article

EU Commission Pushes for Transposition of the EmpCo Directive on Environmental Claims

The European Commission has initiated infringement procedures against 20 EU Member States for failing to transpose the EmpCo Directive by the March 27, 2026 deadline. This directive aims to combat greenwashing by requiring substantiation of environmental claims and third-party certification for sustainability labels, with full implementation expected by September 27, 2026.
European UnionConsumer Protection
Jones Day
Jones Day
Article

Commission Proposes EU Public Procurement Act

The European Commission has proposed replacing the EU's three core procurement directives with a single, directly applicable Regulation that would fundamentally reshape how companies compete for public contracts across Member States. The reform introduces mandatory quality criteria thresholds, embeds ESG considerations as evaluation factors, and establishes new security and European-preference provisions that could restrict participation based on ownership, supply chain exposure, and strategic dependencies.
European UnionGovernment, Public Sector
Jones Day
Jones Day
Article

Federal Court Holds New York’s Climate Superfund Law Preempted By CAA

A federal court has struck down New York's Climate Change Superfund Act, which sought to recover $75 billion from fossil fuel companies based on historical emissions. The ruling found the Act preempted by the Clean Air Act, marking the first judicial decision on state climate superfund legislation and establishing that EPA's rescission of the endangerment finding does not alter preemption analysis.
United StatesEnvironment
Jones Day
Jones Day
Article

Amendment To The General Rules Under Mexico’s Anti-Money Laundering Law (LFPIORPI): Key Regulatory Changes Under Acuerdo 115/2026

Mexico's comprehensive anti-money laundering framework has undergone a sweeping transformation through Acuerdo 115/2026, introducing mandatory risk-based methodologies, enhanced client due diligence protocols, and automated monitoring requirements. With implementation deadlines beginning March 1, 2027, obligated parties conducting vulnerable activities face compressed timelines to overhaul their compliance infrastructure while navigating heightened enforcement risks and stricter beneficial ownership thresho
MexicoGovernment, Public Sector
Jones Day
Jones Day
Article

China's Supreme Court Issues Landmark Judicial Rules On AI: Implications For Product Liability, IP, Data, And Generative AI

China's Supreme People's Court has issued comprehensive judicial rules addressing artificial intelligence disputes, establishing frameworks for product liability, intellectual property rights, and data protection. These landmark opinions provide critical guidance for global companies navigating AI-related legal risks in China's evolving regulatory landscape.
ChinaIntellectual Property
Jones Day
Jones Day
Article

New EU Guidelines On Abuse Of Dominance: Recalibrated Framework, With Ample Room For Aggressive Enforcement

The European Commission has adopted final Guidelines on exclusionary abuses of dominance under Article 102 TFEU, introducing a "workable effects approach" that narrows presumptions while expanding guidance on objective justifications and recognizing sustainability benefits as valid efficiencies for the first time. These Guidelines replace the 2008 Enforcement Priorities Guidance and are expected to significantly impact enforcement practices across EU Member States and beyond, particularly for digital market
European UnionAntitrust/Competition Law
Jones Day
Jones Day