Duffie: CCPs should prep to quash Sifi swap termination stays
Clearing houses need criteria for overriding stays on swap terminations, writes Darrell Duffie
Darrell Duffie is the Dean Witter distinguished professor of finance at Stanford University’s Graduate School of Business.
Bankruptcy law does not cover swaps, repos, deliverable foreign exchange derivatives, securities lending agreements and clearing agreements, among other so-called qualified financial contracts (QFCs). These contracts can be negotiated, if desired, with clauses that allow the counterparty of a firm experiencing insolvency to immediately liquidate collateral, apply close-out
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