The indices are constructed on a set of rules with the overriding criterion being that of liquidity of the underlying credit default swaps (CDS).
(Nolan & Sproehnle 2011)[1] Then Morgan Stanley's Credit desk (under Annabel Littlewood) launched Synthetic TRACERS.
These indices were the first to have an independent calculation agent in an index provider (and not an investment bank trading the underlying).
In 2004, Trac-X and iBoxx merged to form CDX in North America and iTraxx in Europe and Asia.
"(Nolan & Sproehnle 2011) The iTraxx suite of indices are owned, managed, compiled and published by Markit, who also license market makers.
[5] Sovereign CDSs, which benefited from the standardisation of contract form and definitions in 1998 and 1999 as well as successful execution in the case of recent defaults, were considered the most liquid credit derivative instruments in emerging markets.
There is also significant volume, in nominal values, of trading in the HiVol and Crossover (also referred to as Xover) indices.
Also traded are iTraxx Sector indices: NonFin (non-financials), SenFin (senior-financials) and SubFin (sub-financials).
[8] Furthermore, as part of the Dodd-Frank financial overhaul, the Commodity Futures Trading Commission has mandated central clearing of most iTraxx products for entities subject to its jurisdiction beginning April 25, 2013, though the relevant compliance date depends on the size of the entity trading iTraxx products.