Lehman CDS payouts likely to be net $6 billion, says DTCC

The Depository Trust and Clearing Corporation says that based on its initial calculations, net transfers of funds from protection sellers to protection buyers as a result of Lehman Brothers’ credit event will be in the range of $6 billion – considerably less than some sources have speculated.

The company included this information in a statement attacking the idea that the industry lacks a central registry for over-the-counter credit default swaps. It points out that DTCC established its automated trade information warehouse as the electronic central registry for credit default swaps in November 2006.

The DTCC also says that the total amount of credit default swap contracts registered in its warehouse has fallen from $44 trillion at the end of April to $34.8 trillion on 9 October. Less than 1% of these trades reference asset-backed securities. It points out that the size of the credit derivatives market is significantly less than is indicated by market surveys, which tend to double-count trades.