Dealers Commit to Work with Asset Managers Division on Longer Term Derivative Solutions
On Tuesday, October 25, 2005, leaders of the Asset Managers Division of The Bond Market Association met with three firm representatives from the group of 14 Dealer firms that developed the new Novation Protocol.
At this meeting, the Asset Managers Division and the group of 14 Dealers agreed in any event, to continue their dialogue regarding swaps and assignments in general, which could lead to the development of a longer term solution for novations. This dialogue would also involve other industry associations. This solution would be based on automation and efficient technology means and would be designed to provide efficient processing for all market participants.
Members of the Division also discussed the current Novation Protocol and whether dealers might consider a more practical response guideline for novations. The AMD leadership suggested a turnaround time of one to two hours for written consents from Remaining Parties. Dealers suggested that if trade reference numbers were included along with other information contained within the standard Protocol templates, this guideline might be workable insofar as asset managers are concerned, without having to formally amend the Novation Protocol.
The Bond Market Association will continue to facilitate additional dialogue between the Asset Managers Division and the group of 14 Dealers. The staff expects to have another update for its AMD and AMF constituency by the middle of next week.
These meetings between dealers and asset managers provide another example of how this new Division's activities can benefit the bond markets and its participants. We thank the many members of the AMD and AMF that have actively participated in this initiative.