CDS central exchange?

The Lehman auction on October 10 is fast approaching. Previous posts on credit default swaps. In every case I've seen discussed the notional value of CDS contracts exceeds the amount of outstanding debt being insured!

WSJ: The Federal Reserve Bank of New York has summoned participants in the credit-default-swap market to another meeting Friday amid jostling by dealers, exchanges and regulators for a bigger role in this $55 trillion market, according to people familiar with the matter.

The meeting would be the second this week as regulators wrestle with rival solutions to streamline the market and reduce counterparty risk through the creation of one or more central clearinghouses.

... the fallout from unraveling billions of dollars in CDS trades following the problems of Lehman Brothers and American International Group has intensified the urgency among regulators to see major improvements in the infrastructure of this market.

CME and Citadel Investment Group this week unveiled plans to launch a CDS trading platform that would be tied to a clearinghouse, inviting banks and other users to take equity in a project slated to start in early November.

The timetable would give them first-mover advantage over another planned CDS clearinghouse being developed by Chicago-based Clearing Corp., which is owned by banks and brokers.