Wednesday 26 July 2017

Derivatives reform delayed

The biggest overhaul of the €15.5 trillion credit derivatives market in more than a decade has been postponed until September, according to the International Swaps & Derivatives Association.

The planned changes to rules governing credit-default swaps address flaws in the insurance contracts revealed during the financial crisis.

The list of credit events that trigger payouts will be expanded to include bail-ins, when investors are forced to contribute to bank rescues, along with bankruptcy, failure- to-pay and restructuring.

"We decided to allow people time to make the necessary adjustments to operations and infrastructure," said Nick Sawyer, a spokesman for ISDA in London.

News of the delay triggered an increase in the cost of insuring against losses on subordinated debt sold by European banks.

Euro-area finance chiefs will complete the rules for bank rescues in March. (Bloomberg)

Irish Independent

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