
CFTC’s swap stay plan for clearing houses sparks alarm
Lawyers warn proposal could invalidate close-out netting and expose members to higher risks

A second attempt by US regulators to draft bankruptcy rules for central counterparties (CCPs) looks set to create even more problems than the first, mainly due to the proposed introduction of a 48-hour stay on members closing out derivatives at the largest US clearing houses. This proposal from the Commodity Futures Trading Commission would be similar to existing swap stay protocols for failed banks, but with larger implications given the volume of trades cleared by systemic CCPs.
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