Post by Sapphire Capital on Aug 3, 2008 2:52:47 GMT 4
Broker-Dealers to Report to NY Fed
By Ed Zwirn
July 30, 2008
Following up on an agreement with the New York Fed, 17 investment banks and broker-dealers in the OTC derivatives markets will report Thursday on their progress in improving processing of credit derivatives and outline a set of goals aimed at achieving more centralized clearing by year end.
In a $50 trillion market where as much as 50 percent of trades still settle on paper, the industry participants, along with trade groups and regulators, promised in a late March letter to regulators that they would move this year toward T+0 matching, develop a central counterparty for credit default swaps and a robust risk management regime.
Market participants on June 9 reaffirmed their commitment to these objectives and agreed to detail their next steps for addressing these priorities to regulators by July 31.
The agreement is expected to utilize the CDS clearinghouse announced by many of the same financial institutions in May.
Many of the same players, including Goldman Sachs, Citigroup, Credit Suisse, Merrill Lynch and UBS, are both party to the consortium announced late last month to facilitate central counterparty services using Clearing Corp. (CCorp) and Depositary Trust & Clearing Corp. (DTCC) and participants in the NY Fed effort.
The initiative is set to launch in the third quarter and be fully implemented in several product-specific phases in 2008 and 2009. The CCorp/DTCC initiative will at first support the CDX North American and Investment Grade indices.
CDS products such as iTraxx indices, index tranches and single-name products are scheduled for subsequent rollouts.
By Ed Zwirn
July 30, 2008
Following up on an agreement with the New York Fed, 17 investment banks and broker-dealers in the OTC derivatives markets will report Thursday on their progress in improving processing of credit derivatives and outline a set of goals aimed at achieving more centralized clearing by year end.
In a $50 trillion market where as much as 50 percent of trades still settle on paper, the industry participants, along with trade groups and regulators, promised in a late March letter to regulators that they would move this year toward T+0 matching, develop a central counterparty for credit default swaps and a robust risk management regime.
Market participants on June 9 reaffirmed their commitment to these objectives and agreed to detail their next steps for addressing these priorities to regulators by July 31.
The agreement is expected to utilize the CDS clearinghouse announced by many of the same financial institutions in May.
Many of the same players, including Goldman Sachs, Citigroup, Credit Suisse, Merrill Lynch and UBS, are both party to the consortium announced late last month to facilitate central counterparty services using Clearing Corp. (CCorp) and Depositary Trust & Clearing Corp. (DTCC) and participants in the NY Fed effort.
The initiative is set to launch in the third quarter and be fully implemented in several product-specific phases in 2008 and 2009. The CCorp/DTCC initiative will at first support the CDX North American and Investment Grade indices.
CDS products such as iTraxx indices, index tranches and single-name products are scheduled for subsequent rollouts.