Regulators raised the already strong pressure for reform of the derivatives industry following the rescue of Bear Stearns and the collapse of Lehman Brothers, prompting banks to step up moves to terminate old and superseded contracts.
TriOptima, the company that organises so-called compression cycles where trades are torn up, said the industry managed to cancel $30,200bn of credit derivatives in spite of the strain put on bank back offices after the failure of Lehman and a number of other institutions in the final quarter of last year.
Industry representatives say that its ability to cope with the collapse of Lehman and remain open for trading even as bond markets seized up is testament to the improvements made to market infrastructure and to the strength of provisions against counterparty risk.