While Citadel remains a founding member of the newly restructured CDS initiative, CME is bringing in other buy-side founding members, which include: AllianceBernstein, BlackRock, BlueMountain Capital Management, the D.E. Shaw group and PIMCO. In addition, a number of sell-side participants are in the process of becoming founding members.

CME's and Citadel's original intent was to introduce CMDX as an electronic platform for trading for trading CDS, but evidently that didn't gain acceptance by the industry's major CDS players.

"Both buy-side and sell-side participants have expressed an interest in continuing to execute their CDS transactions the same as they do today, but with the added benefit of central counterparty clearing," stated Terry Duffy, executive chairman, CME Group, in the release.

CME executives emphasized that CME is committed to bringing stability and transparency to the CDS market and that the increasing collaboration of founding members from both the buy and sell side would make its offering the strongest and most effective CDS clearing solution.

Key features from the CMDX joint efforts will be carried forward in the clearing-only services, including state-of-the-art book and legacy trade migration facilities. CME's clearing service will support a range of Markit CDX indices and liquid single name CDS at launch. CME Clearing also supports trade entry through its CME ClearPort platform, enabling connectivity from any trading platform.

However, Finextra pointed out that CME's stiffest competition will come from The InterContinentalExchange (ICE), which began clearing CDS contracts in March through ICE Trust. ICE acquired The Clearing Corp. (CCorp.), giving it the support of major broker dealers and it has already cleared $2 trillion worth of CDS contracts.

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