Ice Said to Seek Mortgage-Swap Rebirth for Dodd-Frank Age

IntercontinentalExchange Group Inc. is pitching Wall Street on new derivative contracts allowing investors to wager on U.S. homeowner defaults, six years after subprime-mortgage swaps helped fuel the financial crisis, according to five people with knowledge of the matter.

ICE, which owns the biggest clearinghouse of swaps tied to the creditworthiness of companies, is gauging interest among banks and investment firms for a contract linked to a new type of mortgage securities that Fannie Mae and Freddie Mac started selling last year, said the people, who asked not to be named because the discussions are private. The government-backed firms have issued $4.5 billion of those bonds, which share the risk of home-loan defaults, as policy makers seek to scale back their roles in the $9.4 trillion mortgage market.