Big plans for derivatives termination stays – the BoE view
Regulators plan to suspend termination rights for the buy side, and extend stays to repo and securities-lending trades – as has already happened for bilateral swaps between big dealers. Some buy-side firms are protesting, but the Bank of England’s Andrew Gracie argues changes to termination rights need to be put in context
Last year saw a heated debate over attempts to prevent over-the-counter derivatives terminations interfering with the developing mechanics of bank resolution. At issue was the design of a contractual amendment, signed voluntarily by 18 dealers in November, which would be triggered when a bank entered resolution proceedings and temporarily stay the right of surviving counterparties to immediately
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