Financial Times FT.com

Lehman Brothers

Fed to hold CDS clearance talks

By Aline van Duyn in New York and Hal Weitzman in Chicago

Published: October 6 2008 18:49 | Last updated: October 7 2008 00:20

Banks are hoarding cash in expectation of pay-outs on up to $400bn of defaulted credit derivatives linked to Lehman Brothers and other institutions, according to analysts and ­dealers.

This added pressure on the frozen financial system comes as authorities prepare to meet participants in the so-far unregulated $54,000bn credit derivatives market to speed up plans for the creation of a central clearing house.

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