News Column

MFA Statement on Suspension of Customer Early Termination Rights

August 25, 2014



WASHINGTON, Aug. 25 -- The Managed Funds Association issued the following news release:

Managed Funds Association Today Released the Following Statement on Suspension of Customer Early Termination Rights:

"While MFA supports the G-20 goal of reducing systemic risk in the derivatives market on a global basis, a consequence of this effort is that, in effect, regulators want hedge funds - and their investors - to lose rights that they have negotiated under industry contracts to terminate such contracts with a defaulting counterparty. These termination rights protect customers by allowing them to establish with certainty the exposure that they have with respect to their trades with the failing counterparty. Notwithstanding our concerns, MFA appreciates that larger systemic concerns warrant a more comprehensive approach to managing risk when the largest financial institutions become insolvent. In furtherance of this goal, MFA believes it is critical that any imposition of market-wide waivers of customers' early termination rights proceed in a manner so as to protect against market uncertainty and disruptions that could exacerbate contagion in the financial system at the time of a G-SIFI insolvency or resolution."

[Category: Financial Services]

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