One of two planned clearing houses designed to reduce the risk of trading credit default swaps moved a step closer Thursday to opening for business.

The New York State Banking Department approved an application for a New York trust charter submitted by IntercontinentalExchange Inc., an Atlanta company that is establishing a clearing platform set to be regulated by the Federal Reserve Board.

The department approved the charter for ICE U.S. Trust, a bank being established to house the platform. Now that the charter has been approved, ICE U.S. Trust can raise capital and work toward meeting the department's requirements for issuing a certificate to commence business.

The bank is still waiting for approval by the Fed for its clearing plans, and a spokeswoman for IntercontinentalExchange said the Securities and Exchange Commission and the Commodities Futures Trading Commission were reviewing its business plan. She also said the bank would press forward once the Fed greenlighted its plans.

"We think everything is on track," the spokeswoman said, and the Banking Department gave its approval at the expected time. She said she could not determine when trading on the platform would begin.

IntercontinentalExchange is competing with CME Group of Chicago to establish a credit default swap clearing house, which major dealers have been urged to use to reduce counterparty risk in the market, which is estimated to be worth between $30 trillion and $50 trillion.

CME is setting up a platform that would be regulated by the CFTC. A squabble for jurisdiction over the market has developed between the Fed, the SEC, and the CFTC.

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