The world's major banks have agreed to change rules governing the global derivatives market to avoid future problems related to failing institutions like the Lehman Brothers.

Financial Times, citing people familiar with the matter, reported that 18 major banks, including Credit Suisse to Goldman Sachs, have agreed to give up the right to "close out" deals on derivatives contracts if a financial institution runs into trouble.

The decision comes after several months of complex talks, involving regulators and asset managers, and led by dealers under the umbrella of the International Swaps and Derivatives Association (ISDA).

The ISDA earlier said that a contractual solution for a temporary stay on derivatives close outs was progressing well, after US regulators had demanded banks come up with a plan to stop their counterparties terminating derivatives contracts in the event of a crisis.

The agreed changes to the protocols that govern the $700tn (£435tn, €554tn) derivatives market will take effect from 1 January 2015.

US regulators have been looking to revamp rules of the financial market following the 2008 crisis, which revealed the drawbacks of the existing system.

According to a report from the US Government Accountability Office, 80% of Lehman's derivatives counterparties closed out their deals with the bank within five weeks of its bankruptcy filing.

While that helped companies solve their counterparty risk with the bankrupt bank, Lehman's estate had to spend years in court trying to claw back collateral from its partners.

The recent changes come in line with regulators' thinking that the core of a failing institution should be preserved, the FT noted.

While the changes to the ISDA protocols would cover the vast majority of derivatives contracts, there are several elements yet to settle, according to banks.

Large institutional investors such as BlackRock are still not covered by the changes, and regulators are working to compel them to accept the new protocols.