Our intent has been to ensure that the clearing and settlement practices for all OTC derivatives are sufficiently robust that they would not be a source of increased risk during a period of significantly greater price volatility or trading volumes.
Of greatest concern in September 2005 was the widespread failure of derivatives dealers to enforce a contractual requirement that a counterparty receive the dealer's prior written consent before assigning a credit derivative to another dealer. The failure to enforce this requirement fundamentally compromised counterparty risk management by creating confusion about the identity of counterparties.