New Requirements for Financial Contracts Limit Exercise of Default Rights to Support GSIB Resolution

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US banking regulators have introduced rules imposing new requirements on the terms of certain swaps, repos and other qualified financial contracts (QFCs) of global systemically important banking organizations (GSIBs). In an effort to support the ability of failing GSIBs to be recapitalized on a going-concern basis or otherwise resolved, these rules require contractual provisions limiting the ability of counterparties to exercise default rights arising in the context of a GSIB resolution and ensure that actions taken under US resolution regimes are enforceable on a cross-border basis.

2017-12-07-new-requirements-for-financial-contracts-limit-exercise-of-default-rights-to-support-gsib-resolution.pdf229.29 KB