The New York Federal Reserve is hosting a meeting with banks and institutional investors to discuss establishing a central counterparty for the global credit default swap market, reports Reuters.

Politicians and regulators have clamored for improved oversight of the $55 trillion over-the-counter market, widely blamed for some of the financial sector's recent problems.

Industry players agreed with the Fed and other regulators in July that a "robust central clearing infrastructure" is needed for OTC credit derivatives, the Fed said.

"This will help reduce systemic risk associated with counterparty credit exposure and improve how the failure of a major participant would be addressed," it said.

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