CME Group Inc. is in talks with banking companies including Goldman Sachs Group Inc. and Morgan Stanley to join a credit swap clearing house after signing up Pacific Investment Management Co. and BlackRock Inc. as members.
Dealers have met with CME officials at least a dozen times during the past two months to discuss clearing in the $27 trillion credit-default swap market, people familiar with the discussions said. Pimco, BlackRock, AllianceBernstein Holding LP, BlueMountain Capital Management LLC and D.E. Shaw & Co. are joining the venture, now owned by CME and Citadel Investment Group LLC, according to a statement Friday.
The effort by CME and Citadel has yet to process a trade. U.S. and European regulators have prodded banks to set up clearing houses for over-the-counter derivatives such as credit-default swaps because risks tied to the contracts complicated efforts to resolve a financial crisis last year as Lehman Brothers Holdings Inc. went bankrupt and American International Group Inc. required a government bailout.