European OTC clearing documentation faces delay

Complications over close-out mechanisms and segregation models will delay the European addendum by up to three months, say dealers

The publication of a standard legal contract for over-the-counter derivatives clearing in Europe will be delayed by up to three months, dealers say. Banks, buy-side firms and central counterparties (CCPs) are struggling to find a common stance on close-out mechanisms, Europe's diverse segregation models and how to tackle the region's varying legal regimes.

The addendum – which will be attached to futures agreements or to International Swaps and Derivatives Association master agreements – was due