Brown Brothers Harriman (BBH) has gone now live with central settlement of credit default swap payments for clients.

Central settlement is designed to reduce settlement risk for asset managers by replacing manually processed bilateral payments with automated netted cash flows per account, per currency.

The Depository Trust & Clearing Corporation (DTCC) and CLS Bank International have also launched a central settlement service for OTC credit derivative transactions. The service went live with major dealers in November 2007. Several buy-side institutions had targeted implementation by the end of May 2009.

US and Europe financial regulators want to see an increase in automation for the processing credit derivatives in order to reduce systemic risk. They are specifically targeting manual payment processing, reconciliation and counterparty risk management.

BBH provides specialist services and solutions to clients that include a global custody network of around 100 markets, accounting, administration, securities lending, foreign exchange, cash management and brokerage services.