Creditex and CreditTrade Merge As Industry Consolidates Dow Jones – 25-JULY-2006

NEW YORK (Dow Jones)--The competitive landscape for interdealer brokers in credit derivatives is consolidating.

Two brokers focused solely on helping banks conduct trades in the inter-dealer market, Creditex Inc. and CreditTrade, Inc. announced a merger of their companies Monday.

The new entity, known as Creditex Group Inc. said in a press release that it is set "to execute over $2 trillion in notional single name, emerging markets, index and index tranche credit derivatives" this year.

The companies did not disclose the terms of the transaction, saying only that they expected the deal to close "within the next 30 to 60 days, upon receiving approval from the appropriate regulatory bodies."

credit derivatives allow investors to either reduce or increase exposure to the credit risk of a specific company or sovereign borrower. The market has experienced rapid growth since 2001 with the advent of indexes that pool single name credit default swaps in baskets. Recently, the market has moved to reference risk associated with mortgages, asset-backed securities and loans. Notional volumes of contracts now tops $17 trillion.

"A key driver of this merger is combining Creditex's strength in electronic trading with CreditTrade's abilities in voice brokering of the - Dow Jones CDX series of - indexes," said Brad Bailey, senior analyst at Aite Group in Boston.

He noted, "there is little geographic or product overlap between the two companies," and the new entity "will probably rank number one in credit derivative indexes, structured credit derivative product brokerage and electronic trading." It should also "offer significant liquidity in most
single- name credit default swap sectors," he said.

Both companies were formed during the infancy of the credit derivatives market in the late 1990's. They were solely focused on credit derivatives and went up against established inter-dealer voice brokerages such as ICAP, GFI and Tullett- Prebon.

Creditex has pursed an electronic platform with success in the European market, while CreditTrade has zeroed in on using voice brokers specializing in credit default swaps, indexes and structured products.

"By combining the two companies' complementary strengths, Creditex Group will be best positioned to lead the market in innovation and voice and electronic execution services," said Sunil Hirani, CEO of Creditex Group Inc.

Paul Ellis, chief executive officer of CreditTrade, said: "Bringing together our market leading positions in Europe and the US in both indexes and structured credit will enable us to provide a better and more comprehensive service to our clients."

The new company will have in excess of 225 employees with centers in New York, New Jersey, London and Singapore.

-Michael Mackenzie; Dow Jones Newswires; 201-938-5451 email:
michael.mackenzie@dowjones.com

(END) Dow Jones Newswires
07-25-06 1109ET
Copyright (c) 2006 Dow Jones & Company, Inc.

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