The Federal Reserve Bank of New York has called a meeting with 14 banks to discuss concerns about risk management practices in the $8.4 trillion credit derivatives markets.
The Fed's summons was despatched to bank chiefs earlier this month, requesting the presence of a senior business respresentative and risk management staffers at a powwow in New York on 15 September. Regulators from Britain, Germany and Switzerland are also expected to be in attendance.
Banking regulators have become increasingly jittery about the risks taken on by banks operating in the fast-moving credit derivatives markets. In particular, the watchdogs are concerned by the high level of unsigned confirmations outstanding between counterparties with, in certain cases, transactions remaining unconfirmed for months.
In a report published in July, the influential Counterparty Risk Management Policy Group called for an urgent effort by market participants to clear the backlog of unconfirmed trades and update back office plumbing to deal with the complex new instruments.