“Senior regulators have urged the derivatives industry to rewrite the way its contracts work to reduce the financial chaos that would result in a future banking crash.

“Mark Carney, the Bank of England governor, and Martin Gruenberg, chairman of America’s Federal Deposit Insurance Corporation, are among the signatories to a letter to the derivatives trade body calling for them to push through changes to the documentation used in the $630tn industry.

“The move is part of an attempt to avoid a rerun of the bedlam that followed the Lehman Brothers collapse in 2008 as market players scrambled to figure out how the fallen bank’s financial exposures would be unwound.

“The standard documentation provided by the International Swaps and Derivatives Association should be changed to provide for a short-term delay in closing out a contract in the case of the insolvency or resolution of a large bank, the letter said.“

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