Dealers struggle with VM in non-netting jurisdictions

EU exemptions from margin posting are either hard to obtain or face client resistance

A lack of clarity is causing some banks to restrict trading with certain counterparties

European banks are struggling to comply with new rules on the posting of variation margin to derivatives counterparties in non-netting jurisdictions because of legal uncertainty and resistance from clients.

In order to avoid having to post margin outside the European Economic Area, European dealers must obtain a legal opinion that it would be legally impossible to enforce netting and protection of collateral in the third-country jurisdiction – a so-called negative netting opinion. Critics,

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