The New York Federal Reserve, 14 banks and other market regulators have agreed to work together to try to manage risks in the credit derivatives market, the New York Fed said in a statement late Thursday.

"Discussions focused on market practices with regard to assignments of trades and operational issues associated with confirmation backlogs," the bank's statement said. "Industry participants outlined a number of concrete steps to achieve these goals."

The fourteen banks included some the biggest players in the derivatives market such as

J.P. Morgan

(JPM) - Get Report

,

Goldman Sachs

(GS) - Get Report

,

Deutsche Bank

(DB) - Get Report

,

Morgan Stanley

(MWD)

and

Merrill Lynch

(MER)

The meeting was called after a recent industry report raised concerns on the issue of "unsettled trades" in the derivatives market. Because of the exponential demand from hedge funds, and of banks' inability to keep up pace with the processing of these trades, many positions can remain unhedged and create risks for the parties involved, and the financial system as a whole.

One of the key motors of growth in the $8 trillion derivatives market has been the propagation of collateralized debt obligations, or CDOs, which provide a hedge against debt defaults. These instruments are often re-sold in a secondary market at a fast pace, to the extent that investors end up being unsure about who the counterparty of a particular trade may be.

In a July report, Gerald Corrigan, a managing director at Goldman Sachs and a former New York Fed president, warned that "unconfirmed trades" required urgent attention on the part of regulators and the industry.

Corrigan launched an industry group called the Counterpart Risk Management Policy Group after the collapse of Long-Term Capital Management in 1999.

The proposals put forward by Corrigan's group and others involve obtaining the approval of all parties involved before a trade goes through, which would slow down the unbridled propagation of CDOs.

Another industry proposal is to encourage the computerization of banks' back-office processing of these trades, a large number of which have so far surprisingly been conducted over the phone or by fax, leading to time lags.

The New York Fed declined to comment on which "concrete steps" were put forward but said it "will continue to monitor developments in this market very closely, with a view to encouraging the firms to take the steps necessary to improve the market infrastructure that supports such trading activity."

Also on Thursday, British electronic-derivatives trade confirmation network SwapsWire said it extended its existing network to allow hedge funds to confirm trades with both counterparties and prime brokers simultaneously.

Seven broker dealers --

Barclays Bank PLC

(BCS) - Get Report

,

Credit Suisse First Boston

(CSR)

, Goldman Sachs, JPMorgan,

Lehman Brothers

(LEH)

, Merrill Lynch, and

The Royal Bank of Scotland

-- have already agreed to join the platform, SwapsWire said.