Representatives of the world's most powerful central banks, seeking to prevent banking fiascoes from crippling the world's markets, want global exchanges to speed up settlements of derivatives trades.

In a report on Clearing Arrangements for Exchange-Traded Derivatives, a Group of Ten subcommittee also suggested clearing houses prepare for worst- case scenarios through so-called stress testing, and the use of real-time gross settlement systems for payments and securities transfers.

The committee "has identified various steps that clearing houses could take to reduce credit and liquidity risks," it said, adding that it "believes that clearing houses should carefully consider whether implementation of the steps could produce benefits that exceed costs."

The report, prepared for the Bank for International Settlements, is part of attempts to ensure any individual bank's difficulties do not endanger an entire exchange. The settlements bank has proposed a regular series of reports on the risk exposure of the world's largest derivatives users.

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