Several industry associations (ISDA, BBA and FOA – the futures and options association) have responded to a Treasury informal consultation on the need to carve out from English insolvency law the porting of clearing clients’ positions and margin. They agree on the need to ensure certainty around the porting option when a clearing member becomes insolvent. EMIR’s porting option should also apply where the clearing member is acting through back-to-back transactions and holds the client’s margin. The associations note that porting should be subject to agreement.

UBS terminated its ISDA Master and FX transactions with Lehman Brothers Inc., was obligated to return about $23 million in collateral, wanted to set-off against that $23 million amounts owing by LBI to UBS affiliates as contemplated by the cross-affiliates set-off provision.

If you were waiting to hear what the English Court of Appeal had to say about the lower court decision in Marine Trade S.A. v. Pioneer Freight Futures Co. Ltd. you’ll be disappointed, as the appeal was dismissed by consent of the parties on October 22, 2010.

That darn Lehman Brothers bankruptcy sure is raising some interesting insolvency issues for derivatives market participants (and their lawyers of course). It’s interesting (at least for us insolvency nerds) to think about how some of those issues might play out under Canadian insolvency laws. Here are some thoughts on one of the recent cases with my Canadian spin.

ISDA has written to Treasury on its plans to make insolvency regulations in relation to investment banks. It supports Treasury's plan to take legislative steps only if market practice and regulatory approaches do not work. It endorses the view that sophisticated counterparties should have as much flexibility as possible. It notes the interaction of any regime for investment banks with existing regimes must be clear but does not currently see a compelling case for changes to the current regime.

The business community in Russia is going to see an increase in default claims due to the mounting credit crisis. Many companies will not survive in such an environment and a wave of insolvencies is likely to ensue. The prospect of this has forced the State Duma to focus on developing a robust response. New bills, which would transform the Russian insolvency landscape, are currently under consideration.

The business community is going to see an increase in default claims due to the mounting credit crisis. Many companies will not survive in such an environment and a wave of insolvencies is likely to ensue. The prospect of this has forced the State Duma to focus on developing a robust response. New bills, which would transform the Russian insolvency landscape, are currently under consideration.

ISDA is pleased at how the industry infrastructure for CDS worked in the context of the Lehman default and settlement. It also pointed out the misperceptions about the role of CDS in the financial crisis.