There’s been a lot of recent focus on the impact of Brexit on the derivatives market. That’s no surprise. Derivatives are widely used by companies across Europe to create certainty and stability in their business, and to manage their risk.
ISDA has spent a lot of time looking at the contractual certainty of derivatives trades, and recently conducted analysis on one specific part of this issue: the ability of banks and investment firms to perform existing contractual obligations under transactions between the 27 European Union (EU) member states and UK counterparties that were entered into before Brexit. This analysis focused on six jurisdictions - France, Germany, Italy, the Netherlands, Spain and the UK.
The good news is that the analysis shows there is unlikely to be any impact on the performance of contractual obligations on existing trades - which includes payments, settlements, transfer of collateral and the exercise of pre-agreed options. That’s an important point: cross-bo
…