oapoki

Netting Derivatives: Slippery Slope Marred by Opaqueness

It is sad to see you guys commenting on these, admittedly complex issues, with no idea what you are talking about.

Has any of view taken a look at an ISDA contract? Has any view used an ISDA contract in practices? Has any of view wlaked through the process of netting in a bankruptcy?

I would simply state that "action talks and BS walks". It is not accidental the the derivatives industry has grown to these levels - they add value because they enables participants to hedge risks - even if people misuse thes einstruments (like everything else). In the absence of the ISDA agreement, with its associated actual netting (not imagined as the author contends) benefits (as we have seen in the case of Lehman), we would have chaos.

ISDA contacts have proven to be extremely robust in the face of extreme conditions, and I hate to see what would have happened intheir absence.

So be acreful what you are wishing for!


On Jan 07 10:11 PM Rakesh Saxena wrote:

> Dar rc whalen: Good point re getting rid of traditional ISDA contract
> formats in favour of insurance-driven documentation. Many thanks-
> Rakesh