Brexit Transition for English Law Derivatives Vital, ISDA Says
- Lack of transition means more complexity, uncertainty, costs
- Bank resolution procedures also require a transition period
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The biggest derivatives industry group urged European Union and U.K. policy makers to agree on a transitional period after Brexit for derivative contracts governed by English law to avoid stoking uncertainty and higher costs.
The International Swaps and Derivatives Association’s master agreements are written according to English, New York and Japanese laws, with English rules governing the “vast majority” of cross-border trades in Europe, ISDA said. The system allows counterparties to choose the legal framework and the court that will settle disputes at the start of their relationship, giving them confidence a ruling will be enforced.