Citi hits hurdle in bid to apply China close-out netting
Chinese derivatives counterparties refuse to amend documentation to apply a netting opinion
Citigroup has been unable to apply a netting opinion to derivatives counterparties in China, as clients are refusing to make the required amendments to documentation to allow it to work. The issue highlights the difficulties dealers face gaining better capital treatment for trades with Chinese counterparties.
According to three sources, Citi has obtained a close-out netting opinion from law firm Linklaters for Chinese counterparties, which allows the bank to offset different over-the-counter
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