Recent Deutsche Bank volatility shows market nervousness is a concern, ECB supervisor says

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European Central Bank supervisor Andrea Enria said a selloff in the credit default swaps market could have broader ramifications for the larger share market

shares was concerning as it showed investors were on edge and could be spooked by moves in the small market for credit default swaps , European Central Bank supervisor Andrea Enria said on Tuesday.

Enria said the CDS market is relatively small and illiquid, but that a selloff there could have broader ramifications for the much larger share market. He called for CDS, a form of insurance for bondholders, to be centrally cleared. “There are markets like the single-name CDS market which are very opaque, very shallow and very illiquid, and with a few million the fear spreads to the trillion-euro-assets banks and contaminates stock prices and also deposit outflows.”

 

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