Regulators edge towards opt-in fix for OTC stays issue

Counterparties will likely select a resolution regime in Isda documentation, but it remains unclear how buy-side firms will be persuaded to give up their termination rights

The Federal Reserve in Washington, DC

Regulators looking for a way to avoid mass close-out of over-the-counter derivatives contracts in the event of a big bank defaulting – a phenomenon that could undermine attempts to resolve the institution – are said to be edging towards the so-called opt-in approach, in which the counterparties to a trade would choose to follow resolution rules laid out in a particular jurisdiction. Those rules