Netting problems will restrict pension funds, FCMs warn

Lawyers’ reluctance to grant netting opinions is hiking capital requirements for low-risk trades

david-felsenthal
David Felsenthal, Clifford Chance

Lawyers struggle to remember cases in which a pension fund has defaulted on its swaps, but this hypothetical question is taking on painfully practical significance for futures commission merchants (FCMs), which are looking for certainty on how an insolvent pension client would be treated.

"I am not actually aware of a pension plan defaulting on swaps because of bankruptcy. So it's hard to know how it would work," says David Felsenthal, a partner at Clifford Chance in New York.

Without that

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here