The result was a huge backlog of unconfirmed trades, which, to the extent it resulted in inaccurate trade records, had the potential to exacerbate market participants' market and credit risks. The Federal Reserve Bank of New York has taken the lead, working with other domestic and international supervisors, in helping the OTC derivatives market develop a stronger clearing and settlement infrastructure.
Those efforts focused initially on credit derivatives. At the urging of supervisors, market participants set goals and implemented policies for reducing the huge backlogs of unconfirmed trades. As a result, confirmation backlogs were reduced 94 percent between September 2005 and November 2006.