The Financial Stability Board (FSB) established by the G20 is underway with its working group report on derivative solutions due by October 2010. Bank of New York Mellon (BK) (BNY), however, doesn't seem to be waiting to read it. Last week, BNY announced the creation of a new company to clear futures and derivatives trades on behalf of institutional clients, called BNY Mellon Clearing. Gerald Hassell, president of BNY Mellon said that "with this new company, we will meet the growing needs of clients who trade derivatives and are seeking a global clearing partner with proven operational, financial and risk management expertise." Sanjay Kannambadi will serve as CEO of BNY Mellon Clearing, reporting to Art Certosimo, senior executive vice president and CEO of Alternative and Broker-Dealer Services at BNY Mellon. Previously, Kannambadi was the head of BNY Mellon’s Office of Innovation. He said that the new clearing service was created in anticipation of a deluge of rapid changes in the way derivatives are traded. BNY manages $22.4trn in assets under custody and administration, $1.1trn in assets under management, services $11.8trn in outstanding debt and processes global payments averaging $1.5trn per day. Current Financial reform includes more restrictions on the derivatives market. The FSB will recommend global changes that will "increase the standardization of derivatives and to develop a clear process to consistently implement mandatory clearing and trading requirements at the global level," according to Bank of International Settlements 80th annual report released today. According to a press release from financial firm Wolters Kluwer the derivatives legislation in the reform "would mandate, for the first time, the federal regulation of derivatives under a dual SEC-CFTC (Commodities Future Trading Commission) regime that emphasize transparency." Wolters Kluwer's Law & Business branch said the CFTC would regulate swaps and the SEC would regulate security-based swaps. The Act requires central clearing and exchange trading for derivatives that can be cleared and provides a role for both regulators and clearing houses to determine which contracts should be cleared. Write to Jacob Gaffney. The author holds no relevant investments.