Putting backlogs up front

Now that the confirmation backlogs in credit derivatives are under control, attention has turned to equity derivatives. Several industry initiatives are under way to address some of the issues. Clive Davidson looks at the proposed solutions and the progress made so far

When the Federal Reserve Bank of New York rang the alarm bells on the backlog of unconfirmed credit derivatives trades in 2005, the industry responded promptly and effectively. All those involved could see the Fed's point - the backlog was unacceptably large given the exponential growth of the market, and represented a real systemic risk. But unconfirmed credit derivatives transactions weren't the only danger. Backlogs were growing elsewhere, notably in the over-the-counter equity derivatives