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No sale of dollar assets is planned, China''s central bank governor says
By David Wigan
Reuters
Thursday, January 12, 2006
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?
duid=mtfh17537_2006-01-12_13-03-28_l12611867_newsml
LONDON -- Backlogs of trade confirmations on credit derivatives
continued to rise in 2005 despite bank efforts to fix the problem
after U.S. regulators demanded action, pricing provider Markit said
on Thursday.
The sensational pace of growth in the $12 trillion credit
derivatives market meant banks could not keep pace even as they
invested millions on tackling the problem, Markit said.
"The absolute number of backlogs continued to rise, though as a
percentage of the total they fell," said Jonathan Davies, a partner
at Reoch Consulting, who presented the Markit study. "Still, banks
are trying to get trade capture right, and have made substantial
progress."
Trading volumes for credit default swaps rose 89 percent last year,
according to Markit, with one in three trades on indexes, compared
with one in eight the previous year.
Credit default swaps are insurances against default on corporate
bonds.
Fourteen dealers in December committed to fix 50 percent of the
confirmation problems by the end of April. That was after promising
in October to correct 30 percent of backlogs by the end of January.
Markit on Thursday declined to release figures on the banks'
progress, saying that would breach confidentiality.
Much of the advancement on confirmations was attributable to
increased processing of trades through the Depository Trust &
Clearing Corp. (DTCC), Davies said, which helped detection of so-
called breaks, or errors in matching buyers and sellers.
"Also, banks have spent a lot more money and increased headcount on
operations," Davies said.
Technology spending rose 25 percent in 2005 to an average $32.7
million among leading banks, he said, with 90 percent linked to one
or more electronic trading platforms.
Concern over derivatives backlogs peaked last year, and 14 banks met
with the New York Federal Reserve in September, after which they
vowed address the problem.
The banks were Bank of America Corp., Barclays Capital, Bear
Stearns, Citigroup, Credit Suisse's Credit Suisse First Boston,
Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase & Co., Lehman
Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia Corp.
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