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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (59422)	4/25/2006 9:56:51 AM
From: shades	Respond to of 110194

Fed Peters: Significant Reduction In Unconfirmed CDS Trades . By Michael Mackenzie Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The resolution of old unconfirmed trades in the credit derivatives market remains a work in progress, though the level of such outstanding trades has been cut significantly, said a Federal Reserve official Tuesday. Speaking at the inaugural Credit Derivatives Congress in Lower Manhattan Tuesday, Brian Peters, senior vice president for bank supervision at the Federal Reserve Bank of New York, said: "There has been a significant reduction" in the level of unconfirmed trades," however "the aggregate level is still too high for comfort." The rapid growth of the credit derivative market has produced "many benefits," but these have not come "without growing pains," he said. Peters noted that back in September 2005, when the Fed first summoned dealers and regulators to discuss the trade backlog issue, the number of outstanding confirmations totaled 150,000. This represented "an unmistakable signal of the inadequacy of market practice," he added. And while market practice has improved, Peters noted that the 'key for success is the greater adoption of electronic trading." In the meantime, as the industry works to achieve that goal, Peters underlined the dangers inherent within the current system. Despite all the "apparent progress," the industry remains "manually intensive," leaving the market potentially "vulnerable" to future credit events, he said. Still, Peters commended dealers and their clients for making a "collective effort" to improve market practices and to create a robust trade infrastructure, most notably with the wider adoption of electronic trading and settlement. "Most importantly, there has been a significant increase in electronic participation for newly executed trades," Peters said. Matching trades via such platforms was "nearly 70% in March," up from 45% back in September. Still, the Fed official said that "the share of electronically matched trades is short of what is possible." He said "it's very important for dealers to work with their clients" in signing them up to new standards and electronic systems. Next Target Date June 30 The credit derivative market's struggle to clear the trade backlog reflects the massive growth in recent years in this relatively young market that allows investors and traders to place bets on companies' creditworthiness. These insurance type products range from individual credit default swaps, index products based on baskets of default swaps to specifically tailored credit risk instruments. Since 2001, trading volumes have boomed but trade settlement has lagged, raising concerns over counterparty risk among regulators both in the U.S. and abroad. "It took the industry and the regulators a while to understand the full scope of the problem," said Peters. Matters came to a head last September when the New York Fed summoned 14 leading dealers to a meeting, attended also by other U.S. and European regulators. The dealers committed to clear 30% of the trade confirmations that were outstanding for more than 30 days as of Sept. 30 by the end of January. The trade backlog stems mainly from the industry's slow adoption of electronic trade settlement and processing as trade volumes started booming back in 2002. The lack of trade settlement infrastructure has been compounded by the propensity of hedge funds and other investors to exit trades without informing the original bank they have a new counterparty. Such trade transfers or assignments have been hard to track. By laying off the risk to a third party. this type of trading adds complexity to processing the trade, particularly as many trades aren't settled electronically. It also introduces counterparty risk as the remaining party is no longer facing the original trading partner, which is what raised the New York Fed's concerns last year. "Unauthorized assignments were a clear concern for dealers and regulators," said Peters, who added, "the practice of unauthorized assignments" has practically stopped. Under pressure to get the backlog of trades under control, the dealers recently committed themselves to developing and implementing a set of industry-wide guidelines by Oct. 31, 2006. These include a 70% reduction in the number of confirmations outstanding for more than 30 days by June 30 from the level as of Sept. 30, 2005 at each dealer. Recently, the International Swaps Dealers Association noted the number of outstanding confirmations at large dealers has fallen from 23 days to 16 days. In conjunction with lowering the number of confirmations, dealers are also working at reducing the number of outstanding unassigned confirmations. The dealers also pledged other initiatives, such as the creation of a largely electronic marketplace for all trades that in turn will facilitate instant confirmation and processing. The credit derivative market has also told the New York Fed that it will create a new set of processing standards for those trades that cannot be confirmed electronically and also implement a new method for settling trades following a credit event. Peter's said the Fed "fully expect all participants in the market will act in ways to help make the infrastructure more robust." -Michael Mackenzie; Dow Jones Newswires; 201-938-5451; michael.mackenzie@dowjones.com (END) Dow Jones Newswires April 25, 2006 09:55 ET (13:55 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 09 55 AM EDT 04-25-06

To: Oblomov who wrote (59422)	4/25/2006 9:57:14 AM
From: shades	Respond to of 110194

Diebold 1Q Net Falls 55%;Sees '06 Hurt By Restructure Chg (cant let diebold go out - then how would our elections work?) Dow Jones Newswires Diebold Inc.'s (DBD) first-quarter net income fell 55% to $12.7 million, or 18 cents a share, from $27.9 million, or 38 cents a share. Excluding 4 cents a share in restructuring charges, the latest quarter's earnings were 22 cents a share. The North Canton, Ohio company's revenue rose to 17% $623.7 million from $535.2 million, driven by an 11% rise in service revenue. On average, analysts polled by Thomson First Call expected earnings of 23 cents a share on revenue of $591.1 million. For 2006, Diebold expects restructuring charges of 50 cents to 55 cents a share, including expected charges of 12 cents a share, and additional charges of 38 cents to 43 cents a share. The charges are due to closing the production facility in Cassis, France, which the company also announced Tuesday. Diebold said about $25 million to $30 million of these charges would be cash, and hurt 2006 cash flow. For 2006, Diebold expects GAAP earnings of $1.18 to $1.28 a share, and excluding charges, earnings of $1.68 to $1.83 a share. Previously, Diebold expected earnings of $1.56 to $1.71 a share and non-GAAP earnings of $1.75 to $1.90 a share. Wall Street expects earnings of $1.77. Diebold expects 2006 revenue growth of 2% to 4%. Cash flow for the year is expected to be $140 million to $170 million. In 2005, Diebold posted sales of $2.59 billion and earned $1.42 a share, including 19 cents from discontinued operations. -Josee Rose; 201-938-5400; AskNewswires@dowjones.com (END) Dow Jones Newswires April 25, 2006 09:44 ET (13:44 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 09 44 AM EDT 04-25-06