Last week I was lucky enough to chair the second day of this event . It was well organised, as Osney events tend to be, and fairly well attended given the current environment. There was also a nice mix of speakers there from the US, Holland, Germany, France and the UK, so here are some highlights:

- Clearly the appetite for otc derivatives has not diminished despite what is happening in the markets
- The focus has shifted from the confirmation space to look at risk mitigation in its wider sense ie collateral management, operational risk, legal risk as well as investment risk
- Buyers are therefore looking for the killer "solution" - preferably in one system - but this has yet to emerge
- New areas to look out for were reconciliation services and compression services
- CDS Clearing centrally is almost upon us

To me the most interesting thing is the final point. The whole world wants this to happen and, from the letter sent to the Fed by the Operations Management Group, there are some ambitious targets to hit. Clearly this hit the sell side first, but the buy side will need to react as well (see below).

The race to become the first in production is an interesting one (both Eurex and Liffe's BClear were there) - as to me it represents more than just a race for clearing cds (which are after all a relatively small part of the OTC arena), it is about who will win the whole OTC prize - all credit instruments, as well as trade execution. The exchanges in question are also going to be offering radically different formats (a futures clearing model like CME and Liffe or a freshly capitalised clearing house such as that proposed by ICE and the Clearing Corp).

The benefits from having a central clearing facility are obvious - price transparency, lower settlement costs and better liquidity, and multilateral netting - though I am not sure that the investment management community has yet realised the effects this will have on them as the increased need for marginging will in turn mean changes to liquidity management at both the fund and enterprise levels.

If you think you missed out here ISC (ie me) will also be chairing the Derivatives Operations stream at TSAM in march. I am also currently surveying the post trade processing providers (asset servicers and software providers) and the results will be published in my quarterly newsletter that you can sign up for here