"One of the concerns raised by regulatory bodies is the concentration of CDS trading in only a few dealer institutions in recent years.
Over time, the use of clearinghouses such as ICE Trust [ICE Clear Credit LLC since July 16, 2011] is expected to reduce the volume of settlement payments among members of the clearinghouse and, in theory, reduce counterparty credit risks that arise under CDS.
[8] Bloomberg's Terhune (2010) explained how investors seeking high-margin returns use Credit Default Swaps (CDS) to bet against financial instruments owned by other companies and countries.
Intercontinental's clearing houses guarantee every transaction between buyer and seller providing a much-needed safety net reducing the impact of a default by spreading the risk.
[7] Brookings senior research fellow, Robert E. Litan, cautioned however, "valuable pricing data will not be fully reported, leaving ICE's institutional partners with a huge informational advantage over other traders.
On March 4, 2009, ICE announced that ICE US Trust, LLC (ICE Trust), a New York limited liability trust company, received regulatory approval from the Board of Governors of the Federal Reserve System[3] to become a member of the Federal Reserve System and to serve as a clearing house and central counterparty for credit default swap (CDS) transactions, initially for North American CDS indexes and later adding liquid single-name swaps.
Now known as ICE Clear Credit LLC it is subject to direct regulation and supervision by the CFTC and the SEC.
[10] ICE Clear Credit LLC received temporary no-action assurances from CFTC to exempt ICE swap market participants from various requirements under the Commodity Exchange Act (CEA), that would otherwise apply to certain swap transactions as a result Dodd-Frank Wall Street Reform and Consumer Protection Act.
"The marketplace as it functions now 'adds up to higher costs to all Americans,' said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives.
[14] In a call with investors on November 1, CEO Sprecher had discussed the company's position in and preparation across its numerous markets, including the prospects for SEFs.