Arguments about what constituted a credit event, and so would trigger a settlement, ended up in the courts, and processing backlogs piled up as the market grew so rapidly. Now the problems have shifted to equity derivatives, commodity derivatives and, especially, secondary loans.
With the new-found interest among hedge funds and institutional investors in participating in the loan market, volumes of transactions have grown dramatically and there are reports that settlement times have yawned to an extraordinary T+60. Regulators are now urging the banks to fix things up – otherwise some loans will be repaid before they are settled.
