when a credit event occurs the contract may be settled physically historically the most common method or by cash in a physical settlement sellers receive an actual bond from the buyer cash settlement though became the more preferred method when the purpose of cdss shifted from hedging tools to speculation in this type of settlement the seller is responsible for paying the buyer for losses 6
the u s comptroller of the currency issues a quarterly report on credit derivatives in a report regarding the first quarter of 2024 it placed the size of the entire credit derivative market at 4 7 trillion 3 2 trillion of which were cdss 2