United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2007-06-13 monographic deposited born digital 48 p. GA 1.13:GAO-07-716 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-07-716 P0b002ee180383b65 f:d07716 DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-07-716 machine generated eng fdlp REPORT GAOREPORTS-GAO-07-716 GAO-07-716 Banking regulation Bonds (securities) Credit bureaus Derivative securities Federal regulations Lending institutions Policy evaluation Risk management Securities regulation Trade agreements Trade regulation Policies and procedures Other Written Product A70666

Over-the-counter (OTC) credit derivatives are privately negotiated contracts that allow a party to transfer the risk of default on a bond or loan to another party without transferring ownership. After trading in these products grew dramatically in recent years, backlogs of thousands of trades developed for which dealers had yet to formally confirm the trade terms with end-users--such as hedge funds, pension funds, and insurance companies--and other dealers. Not confirming these trades raised the risk that losses could arise. GAO was asked to review (1) what caused the trade confirmation backlogs and how they were being addressed and (2) how U.S. financial regulators were overseeing dealers' credit derivative operations, including the security and resiliency of the information technology systems used for these products. GAO analyzed data on credit derivatives operations that dealers submitted to regulators, reviewed regulatory examination reports and work papers, and interviewed regulators, dealers, end-users, and industry organizations. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-07-716/html/GAOREPORTS-GAO-07-716.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-07-716/pdf/GAOREPORTS-GAO-07-716.pdf GAO-07-716 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-07-716 Other Written Product GAO-07-716; Credit Derivatives: Confirmation Backlogs Increased Dealers' Operational Risks, but Were Successfully Addressed after Joint Regulatory Action; Banking regulation Bonds (securities) Credit bureaus Derivative securities Federal regulations Lending institutions Policy evaluation Risk management Securities regulation Trade agreements Trade regulation Policies and procedures Title 15 Section 77b-1 Title 15 Section 78c-1 Title 15 Section 78cnote Title 15 Section 78j(b) 15 U.S.C. 77b-1 15 U.S.C. 78c-1 15 U.S.C. 78cnote 15 U.S.C. 78j(b) Title 1215 Section 78cnote 1215 U.S.C. 78cnote