Legal clouds hang over RWA-driven netting push
New capital requirements are making it more difficult for banks to trade with counterparties that are not covered by a netting opinion. That is spurring attempts to expand coverage, but can leave banks and lawyers on uncertain ground. By Lukas Becker
At first glance, there is not much to unite Azerbaijani oil companies, French covered bond vehicles and the Church of England Pensions Board. Actually, there isn’t much to unite them at second glance either – but what they share is the fact that they have all recently been the subject of a push by banks to obtain netting opinions for individual derivatives users, or classes of user.
This is not new behaviour – there have always been certain counterparties that are not covered by the country
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