The U.S. Securities and Exchange Commission has approved the creation of a corporation to handle clearing and settlement of U.S. dollar-denominated Brady bonds.

Brady bonds were issued by a large number of Latin American and other debtor countries earlier this decade in exchange for tens of billions of dollars worth of commercial bank debt. Around $2.6 trillion were traded internationally last year.

The clearing company, Emerging Markets Clearing Corp., is due to begin operating in April. The corporation has also applied for SEC approval to handle sovereign Eurobond issues and other emerging-market debt issues. Total trading in emerging-market debt reached nearly $6 trillion last year, up 12% over 1996, according to the New York-based Emerging Market Traders Association.

U.S. members of the corporation include BankBoston Corp., BankAmerica Corp., Bankers Trust New York Corp., Chase Manhattan Corp., Citicorp, and J.P. Morgan & Co.

Michael M. Chamberlin, executive director of the trading association, noted that recent financial turmoil in Asia and other emerging markets has increased the need for a formal clearing system after a large number of trades failed to match.

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