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CFTC paves way for no-deal Brexit swaps transfers

March 26, 2019, Risk

Anne Termine is quoted in Risk regarding U.S. margin rules in the event of Brexit. To ensure continued access to the full range of services, EU-based swaps counterparties may wish to move their contracts to affiliates outside of the UK, says Ms. Termine. Swaps dealers may need to move their swaps, for example, to the EU from a UK platform because there is no passporting in the UK. This rule enables them to do that while maintaining the legacy nature of the swaps under the US rules, as long as they don’t change the terms of the swap,” she says. “These are swaps in existence before the implementation of margin rules that were grandfathered in, allowing them to avoid the costs and complexities of the margin rules. The concern is about what happens to these swaps based in the UK if there is a no-deal Brexit, with no recognition among the EU and UK markets and the rules and regulations of the different sovereign nations.”

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