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Derivatives to face tougher regulation

Derivatives are expected to face tougher regulation under new plans expected from the Treasury this week, according to reports.

Possible changes expected from Chancellor Alistair Darling include rules to prevent credit default swaps from trading in private by investment banks and other professional market participants in favour of a clearing house system to contain risk.

CDS figures are used by advisers and fund managers as a way of assessing the creditability of a company, bank or government but like credit ratings were deemed to be flawed during the financial crisis.

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