IntercontinentalExchange Group Inc. (ICE) is pitching WallStreet on new derivative contracts allowing investors to wager onU.S. homeowner defaults, six years after subprime-mortgage swapshelped fuel the financial crisis, according to five people withknowledge of the matter.

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

Subprime mortgage derivatives were among the fastest-growingfinancial instruments during an era of innovation that fueled thecredit bubble that triggered the 2008 crisis. As the market for thenew risk-sharing debt matures, creating swaps that allow investorsto start betting against it or hedging against losses would be “thelogical next step,” said David Liu, co-manager of asecuritized-asset fund run by New York-based TIG Advisors LLC.

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