Fed praises credit derivatives progress

The New York Federal Reserve Bank has praised credit derivatives dealers for cutting delays in deal processing

Fourteen major banks and representatives of German, Swiss, UK and US regulators met on Thursday in New York to review progress in cutting confirmation delays. According to the Fed, all 14 banks managed to cut delays of more than 30 days by at least 30%, with an aggregate reduction of 54%, by the end of January.

The Fed also said "virtually all active clients" had been added to the Depository Trust and Clearing Corporation (DTCC) electronic confirmation platform.

In October last year, the banks committed to moving to a T+5 standard - settlement within five days - for vanilla confirmations, saying the move to automated processing would be vital to this effort. Electronic confirmation has risen from 46% in September 2005 to 62% in January 2006.

The banks have committed to producing a plan this month on further improving processing times, and to outlining acceptable practice for post-trade OTC derivatives processing.