management ; or affecting asset prices in dependent markets. with volumes and values in several markets having hit record levels during the market turmoil and remaining high for a sustained period, infrastructure providers have experienced a severe stress test and, by and large, have passed with flying colours. cls, for instance, processed nearly 860, 000 transactions ( more than $ 8trn in value ) on 19th september, 2½ times the daily average in june. 4. current trends in the wholesale market infrastructure : new markets and new demands. 19 today, central banks around the world still typically provide the ultimate settlement asset and sometimes operate, and also own, key components of the payment and settlement infrastructure. for key elements of the infrastructure central banks have assumed an oversight role. depending on the particular regulatory architecture in place, this is sometimes shared with the financial regulator, as in the uk. 20 but this is a dynamic environment : the landscape is broadening and deepening, with niche market - specific facilities, cross - border systems, new entrants and commercial bank providers becoming more important. new sources of risk are emerging, presenting new challenges for central banks in their pursuit of monetary and financial stability. financial innovation and technological advancement 21 the way technology is transforming markets and therefore payment systems is illustrated in the rapid growth in otc derivatives markets ; and the increased penetration of electronic trading platforms – and automated trading strategies – across a range of markets. 22 according to data released by the bank for international settlements, notional amounts outstanding in global otc derivatives markets rose by almost 40 % in 2006 – up more than 260 % over the past five years. the outstanding value of the credit segment of the market doubled in value in 2006 alone and trading activity has remained high through 2007, especially during the recent market turmoil. 23 these markets have traditionally been cleared and settled via bilateral arrangements between the counterparties to the trade, but new automated infrastructure services have emerged, partly in response to an international regulatory initiative led by the federal reserve bank of new york ( frbny ). major dealers now confirm almost 90 % of credit derivatives trades electronically, as against less than 50 % two years ago. 24 an important recent addition to the landscape is dtcc deriv / serv ’ s trade information warehouse, which maintains a so - called “ golden copy ” of each credit derivatives trade. with appropriate interoperability between systems, these data can support a range of ancillary services : calculating and settling payment obligations, managing collateral, terminating

interface with infrastructures. it is important to ensure that individual member behaviour cannot threaten the smooth - functioning of the system. some incidents during the recent market turbulence revealed issues around members ’ processing capacity, underlining the value in member - level testing to ensure that participants can always support the delivery of the network benefits from the smooth operation of the infrastructure. ( ii ) ensure effective international cooperation in oversight and operations, and coordination in risk assessment activities 44 the second main challenge is to allow market participants to reap the benefits of globalisation, while ensuring that the risks are adequately controlled. an extended and highly connected network can simultaneously be both robust and fragile : robust, because risks may be more effectively shared and dispersed across the system ; fragile in that major risks can flow more rapidly through the system. 45 naturally, market participants have been pushing hard for the removal of obstacles to efficient cross - border settlement and barriers to the seamless cross - currency management of liquidity. central banks have been urged to consider accepting foreign collateral or implementing other arrangements to facilitate cross - currency liquidity management. some already do so – the bank of england, for instance, routinely accepts euro - denominated collateral in its operations – and a recent report from the cpss encouraged other central banks to consider accepting foreign collateral, at least in emergency circumstances. the eurosystem has recently begun to explore new options. 46 provision of cross - border collateral arrangements may entail a high degree of coordination and cooperation between central banks internationally, for instance in opening custody and correspondent accounts, and sharing information on local infrastructures and market practices. 47 more generally, strong international cooperation in the sphere of risk assessment and crisis management responses is also clearly important. with increased links between infrastructure providers in different centres and the emergence of new cross13 border infrastructures, greater cooperation is also required in the conduct of oversight : not only in terms of assessment of particular overseen cross - border infrastructures against international standards, but also in identifying potential interdependencies between national infrastructures. while existing cooperative arrangements work well, the model needs to expand and continue to evolve. 6. concluding remarks 48 the resilience of the infrastructure of wholesale payment, clearing and settlement systems to both operational and financial shocks remains a key requirement of financial and monetary stability. but the landscape is changing fast in response to technological change and the financial innovation and globalisation it allows. cross border and global networks are squeezing our national monopolies and commercial banks are playing an increasing role. these