- Close-out netting has reduced over-the-counter derivatives credit exposure by over 85%. Without the benefits of netting, banks worldwide might face a capital shortfall of over $500 billion.
- Close-out netting is necessary because it enables derivatives participants to protect against adverse market changes following default of a counterparty.
- Policy-makers have consistently supported the enforceability of close-out netting because it promotes financial system stability.
- Current proposals designed to promote orderly resolution of failed financial institutions should be crafted carefully to avoid weakening the benefits of close-out netting.
Documents (1) for The Importance of Close-Out Netting
Latest
DRR Expanded to Cover Hong Kong's Revised Rules
ISDA has expanded its Digital Regulatory Reporting (DRR) solution to support revised derivatives reporting rules in Hong Kong, enabling in-scope firms to implement the changes cost-effectively and accurately. The amendments from the Hong Kong Monetary Authority (HKMA) and the Securities...
Joint Letter on Simplification of EU Taxonomy
On October 6, ISDA, the Association for Financial Markets in Europe (AFME), the European Fund and Asset Management Association (EFAMA), the European Association of Co-operative Banks (EACB) and the European Banking Federation (EBF) published a policy statement in support of...
Paper on Removal of SI Regime
On October 10, ISDA, the Association for Financial Markets in Europe (AFME) and the International Capital Market Association (ICMA) published a paper on the practical implications of the recent discontinuation of the systematic internalizer (SI) regime for derivatives, bonds and...
ISDA Analysis to ESMA on Reporting Costs
ISDA has submitted to the European Securities and Markets Authority (ESMA) an analysis of the costs of regulatory reporting, which proposes where savings can be made most effectively. This document supplements the recent response submitted by ISDA, the Association for...