The U.S. Federal Reserve is in discussions with other regulators to become the lead regulator for clearing trades in the $33 trillion credit default swaps (CDS) market, news service Bloomberg said, citing people with knowledge of the proposal, reported Reuters.
The Fed, the U.S. Securities and Exchange Commission (SEC), the Treasury Department and the Commodity Futures Trading Commission (CFTC) are discussing a memorandum of understanding that lays out the supervision of clearinghouses, Bloomberg said.
The SEC and the CFTC would also share trading information under the plan, it said.
CDS are used to protect or insure against the risk that a borrower will default on debt, or to speculate on a borrower's credit quality.
The Fed has been pushing the industry to form a clearinghouse that would absorb losses should a market maker fail, the news agency said.
No one at the SEC, CFTC or the Treasury could immediately be reached for comment.