On 4 November 2025, the European Systemic Risk Board (ESRB) published a report, setting out an analysis of the market for credit default swaps (CDS).

Overview

The report’s findings highlight the existence of several issues with the CDS market such as concentration, illiquidity and information asymmetries in the single-name CDS market.

To address these policy objectives, the ESRB proposes four policy measures:

  1. Enhance post-trade transparency for single-name CDSs: adjusting the EU’s post trade transparency regime to apply, as a minimum, to single-name CDSs on EU Globally Systemic Banks and EU sovereigns, regardless of whether they are centrally cleared and how they are traded.
  2. Strengthen supervisory access to information through improved quality and standardisation of data reported as well as through enhanced global cooperation: authorities need a more robust and integrated reporting environment enhancing the consistency, completeness and granularity of reported data through standardised formats and broader use of international identifiers. The Report also proposes establishing structured information-sharing frameworks on CDS exposures and developing a real-time monitoring tool for the CDS market.
  3. Promote the efficiency and functioning of the single-name CDS market: it is important to identify and address structural factors limiting demand, supply and competition in the single-name CDS market.
  4. Improve credit risk assessment frameworks by reducing excessive reliance on CDS spreads and raising awareness of the price formation mechanisms: that policymakers, market participants and other stakeholders should deepen their understanding of and consider the structural limitations associated with single-name CDS pricing, particularly under conditions of market stress. The Report mentions it is essential to account for these limitations in order to support more informed and accurate interpretations of the role of CDS pricing as an indicator of credit risk.

The ESRB sets out that the proposed policies constitute a short to medium-term roadmap to improve the functioning of the market.

The ESRB published this report in co-ordination with the International Organization of Securities Commission, which has also published a report on the single-name CDS market.