Derivatives reform delayed
Published 04/02/2014 | 02:30
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)