Prodded by regulators, the top 11 investment banks will announce the creation of a clearing house for the settlement of OTC derivative contracts between members.

In an agreement between The Clearing Corporation and the Depository Trust and Clearing Corporation, a clearing house will be created to reduce the systemic risk in the $62,200 billion global credit derivatives market.

Responding to the increase in the potential risk of default by counterparties, investment banks which include Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup will establish a guarantee fund to cover losses by its member firms if any should fail as reported by the Financial Times.