Leading financial market players have reached formal agreement with regulators on measures for safer handling of the $684 trillion global derivatives market.

These are the most explicit commitments yet from an industry widely accused of exacerbating the financial markets crisis. They're laid out in a letter, alongside an official acknowledgment from the New York Federal Reserve, posted on the central bank's Web site Tuesday. Signatories, known collectively as the Operations Management Group, comprised 27 of the derivatives market's most prominent participants, including leading dealer banks such as JPMorgan Chase (JPM) and Deutsche Bank (DB) and money managers AllianceBernstein (AB), Citadel Investment Group and BlueMountain Capital Management.

The letter, which addresses issues discussed at an April 1 meeting between major market participants and banking supervisors, lists several deadlines to be met this year.

Prominent among them is the commitment to register all credit derivatives trades, in either a central clearinghouse or a trade warehouse, by July 17. All equity derivative trades will be similarly logged by July 31, and interest-rate deals by the end of the year.

Clearing facilities must be available to all market participants by Dec. 15, and that service - which guarantees both sides of each trade - is to be extended to other over-the-counter products. Industry participants also agreed to work with supervisors on specific goals to be released Aug. 31.

The dealer community pledged to starting carrying out daily electronic synching of their portfolios by June 30. That will mean frequent reconciliation of around 70% of all outstanding derivatives transactions, according to the industry letter.

The consensus represented in the letter wasn't easy to reach, in part because it involved closer collaboration than ever before between the dealer banks that have long dominated the marketplace, and money managers looking to expand their influence.

In a gesture toward better cooperation among market participants, signatories also promised more democratic representation of buyers and sellers in trade groups, including leading decision-making bodies such as SIFMA and the MFA.

But that's not the only skirmish in a battle for market reform on many fronts. Wall Street banks with large derivative-trading businesses have been outwardly supportive of greater regulatory oversight of their highly lucrative market. But behind the scenes there has been hand-wringing over the details of certain proposals and discussions about how the industry can help shape the rules.

Most recently, market participants were taken aback by the Treasury Dept.'s proposal to grant the Securities and Exchanges Commission and the Commodity Futures Trading Commission authority to mandate centralized clearing of certain derivatives, and force trade of "standardized" contracts onto exchanges or electronic platforms that would make pricing more transparent. Tuesday's letter represents another stage in the convergence between the industry's wishes and the ambitions of regulators to bring to heel a privately conducted marketplace that's escaped formal oversight for decades.

"We will continue to demand further improvements until our objectives are achieved," said William Dudley, President of the Federal Reserve Bank of New York, in the central bank's responding release.

Copies were sent to 11 regulatory bodies, including the Office of the Comptroller of the Currency, the Securities and Exchanges Commission and the United Kingdom Financial Services Authority. Missing from that list, however, were two bodies that have been closely involved in discussions of tighter oversight for derivatives, but do not have formal responsibilities for monitoring the banking sector - the Commodity and Futures Trading Commission, and the European Central Bank.

For more information, see http://www.newyorkfed.org/newsevents/news/markets/2009/ma090602.html

-By Emily Barrett, Dow Jones Newswires; 201-938-2248; emily.barrett@dowjones.com

(Serena Ng contributed to this report.)