Coupled with the increased liquidity in the credit derivatives markets at the turn of the century, with dramatically increased corporate default rates, fixed income investors and buyers of credit protection sellers were receptive to a new generation of structured credit products, which further improvement would their skills transfer credit risk efficiently, especially products with improved liquidity and diversification. In April 2003, in partnership with Morgan Stanley, JPMorgan, a co-marketing and co-d … Read more »

Coupled with the increased liquidity in the credit derivatives markets at the turn of the century, with dramatically increased corporate default rates, fixed income investors and buyers of credit protection sellers were receptive to a new generation of structured credit products, which further improvement would their skills transfer credit risk efficiently, especially products with improved liquidity and diversification. In April 2003, the., In partnership with Morgan Stanley, JPMorgan, a co-marketing and co-design a line of credit indices Their first product, called TRAC-X was a portfolio underlying single name credit default swaps. In order to increase the liquidity and TRAC-X is the new benchmark for credit trading, Morgan Stanley and JPMorgan offered to make two-sided markets is limited (depending on market), bid-offer spreads and licensed TRAC-X to other dealers. In the spring of 2004, Lisa Watkinson, managing director and global product manager for credit default swaps and credit indexation products at Morgan Stanley in New York, responsible for the development and marketing of all credit derivatives and index products worldwide. Recently, the TRAC-X products had faced criticism in the market and opportunistic, competing Cart been initiated credit products. Although Morgan Stanley was still at the helm of an explosive and profitable structured credit products, Watkinson faced significant business development risk and try to keep connected with their first-mover advantage liquidity.
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from
Darrell Duffie
Source: Stanford Graduate School of Business
43 pages.
Release Date: 12 February 2004. Prod #: F268-PDF-ENG
Emergence of Default Swap Index Products HBR case solution

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