Brexit: banks take the ‘no’ out of novations

Swaps clauses stop end-users blocking counterparty switch, making it easier to move trades to EU affiliates

Banks could use obscure legal clauses to help overcome obstacles to transferring trades to EU entities

Infopro Digital montage

As banks prepare for Brexit, some have started including terms in their swaps contracts that would make it easier for them to transfer trades to a new legal entity. But as life gets easier for the banks, it could become harder for their customers, exposing them to increased costs as well as accounting and regulatory headaches.

The clause states that consent for novations is “not to be unreasonably withheld”, and three sources tell Risk.net they have seen it cropping up in swaps documentation in