CDS has different meanings in different fields.

1.CDS is the abbreviation of credit default swap

, also known as credit default swap and loan default insurance, and it is the most widely traded OTC credit derivative in the world. Credit default swap is a tradable policy with floating price, which guarantees the loan risk.

2.CDS is the abbreviation of Certificates of Deposit

Generally speaking, when investors buy CDs, they invest a fixed amount for a fixed period (six months, one year, five years, or longer), and when the certificates of deposit expire, the bank will pay the investor the principal plus interest. However, if the investor wants to get back the principal before the maturity of the time deposit certificate, the investor may have to pay a fine or give up part of the interest income.

3.CDS is a network technology that enables Internet customers from all over the world to access the content cached in the local cache server when visiting these websites, thus shortening the request response time and network delay and reducing the load on the website server.

the main risk of p>CDS is to encourage banks to increase lending to high-risk projects, reduce the quality of lending, and easily encourage banks to relax tracking after lending, resulting in moral hazard.

credit default swap is a new financial derivative product, similar to insurance contract. The creditor sells the debt risk through this contract, and the contract price is the premium. If the credit default swap contract is priced too low by investors, when the default rate of subprime mortgage rises, this "premium" will rise, which will increase in value.

CDS (credit default swap) is a derivative product between two counterparties, similar to insurance against bond default. The buyer of CDS usually pays the seller, and the compensation that can be obtained from the seller if a bond is breached may last for one to five years. Its price is expressed in BP, and the higher the price, the greater the possibility that both parties think the bond will default. 1 BP is equivalent to 1 standard contract, which is a bond of 1 million US dollars, and the annual insurance premium is 1 million US dollars.

CDS are often used by hedge funds, investment banks, etc. to bet whether a company will go bankrupt in the future, and traders don't really hold bonds of a company. The market size of CDS in the United States is huge, covering the market of bonds and loans as high as $62 trillion.

in a CDS contract, the CDS buyer pays a certain fee to the CDS seller on a regular basis, which is generally expressed by a fixed basis point based on the face value. If there is no default event of the credit subject, the CDS seller has no cash outflow; Once the credit subject defaults, the CDS seller is obliged to compensate the difference between the face value of the bond and the value of the bond after the default event in cash, or buy the bonds held by the CDS buyer at face value. The seller of CDS can be a third party such as a lead underwriter or a commercial bank, and can trade CDS in the inter-bank market or other markets, thus transferring its own guarantee risk.

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