As we previously posted in January 2009, under Transparency in Financial Markets and Delivering Transparency to NCOIL, Marketcore testified before the National Conference of Insurance Legislators (NCOIL) concerning CDS and the credit and liquidity crisis. That testimony, and the subsequent letter, were submitted as Marketcore’s contributions to the drafting of model legislation for the regulation of credit default swaps (CDS).
We are pleased to announce that the Credit Default Insurance Model Legislation, authored by New York State Assemblyman Joseph Morelle, was adopted in November 2009, with Marketcore acknowledged for its participation.
That legislation “formally recognizes CDS as a form of insurance subject to many of the regulatory protocols applied to the insurance industry as a whole. Specifically, it prohibits risky “naked” credit default swaps in which the buyer has no actual insurable interest, and establish a regulatory framework for “covered swaps,” now to be overseen by states as credit default insurance (CDI).