Weekly highlights

Weekly highlights

The Banking & Finance team produce a weekly roundup of current awareness

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Latest Banking & Finance News

LSTA and ISDA submit parallel responses to FSB's NBFI leverage consultation

The Loan Syndications and Trading Association (LSTA) and International Swaps and Derivatives Association (ISDA) have both submitted responses to the Financial Stability Board's (FSB's) consultation on leverage in non-bank financial intermediation (NBFI). LTSA and ISDA both emphasise that the NBFI sector's diversity makes it unsuitable for broadly applied regulation. The LSTA advocates for well-tailored, proportionate measures that preserve the benefits of leverage, particularly highlighting that private corporate credit poses minimal stability risks. ISDA recommends authorities first conduct comprehensive system-wide analysis using existing trade repository data before implementing new measures, and suggests focusing on liquidation risks through improved repo market liquidity and central counterparty margining transparency. Both responses underscore the need to balance risk mitigation with maintaining beneficial market functions.

English court upholds Italian swaps settlements (Deutsche Bank and Dexia v Provincia di Brescia)

Dispute Resolution analysis: The High Court granted declarations as to the validity of swap transactions and the effect of terms in two settlement agreements. The claimant banks, Deutsche Bank (DB) and Dexia, asked the court to grant this relief because the defendant Italian local authority (Brescia) had launched new proceedings in Italy in contravention of the earlier settlement agreements in which it had accepted the validity of the transactions and waived the arguments it now sought to advance in Italy. The court was satisfied that it should grant the declarations as these would be effective in preventing the defendant from undercutting the settlements. Written by Madeleine Brown, senior knowledge lawyer and Robert Daniell, senior counsel at Macfarlanes LLP.

ISDA responds to BOE's proposed fundamental rules for FMIs

The International Swaps and Derivatives Association (ISDA) submitted its response to the Bank of England's (BOE's) consultation on proposed fundamental rules for UK financial market infrastructures (FMIs), including central counterparties (CCPs). While expressing broad support for the proposed framework, ISDA advocated for enhanced transparency provisions across several fundamental rules, particularly in FR 1 - 3, as well as in FR 9 regarding operational resilience assessments. ISDA welcomed the introduction of FR 10, which addresses systemic risk management by CCPs, while proposing that results stemming from risk assessments should be shared with CCP participants to strengthen their risk management capabilities.