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Derivatives contract re-write lacks buy-side incentives 

March 18, 2014
Paloma Migone, The Trade

Buy-side firms may be at risk of being sued for negligence if they agree to a new derivatives contract being drafted by the International Swaps and Derivatives Association (ISDA).

ISDA has been working on amending its master agreement – a standardised and widely used contract for OTC derivatives – for the past year after pressure from regulators to insert a short-term suspension of termination rights in the event of a default.

The association received a letter from senior regulators, including Bank of England governor Mark Carney, on the matter last November, with the goal to temporarily stop counterparties from claiming contracts and triggering cross-defaults as seen in during the collapse of Lehman Brothers.

Read more: The Trade

 
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