Creditworthy banks are becoming more likely to turn down client requests to take on trades -...

|By:, SA News Editor

Creditworthy banks are becoming more likely to turn down client requests to take on trades - also know as novate - from weaker dealers as counterparty risk rises. The term became familiar in 2008 as traders knew the end was near for Bear Stearns and Lehman when stronger banks refused novate requests from the hedge fund counterparties of the 2 struggling operations.