Update on Novation Protocol and Practices
Please see the items in the subheadings below, which highlight asset managers' activities relating to recent developments in swaps novation operating practices.
Client Letters Sent on November 17
On November 17, the Asset Managers Division of The Bond Market Association was pleased to announce that 18 dealers have committed to promptly sending novation consents to their clients. In a letter issued to buyside clients on this date, 18 of the major derivatives dealers agreed to a two hour consent guideline. Determining a practical response guideline for novations was a result of recent discussions between dealers and representatives of the Asset Managers Division.
Click here to read the Client Letter
Response by Asset Managers to Client Letter
The Bond Market Association and The Asset Managers Forum are pleased with the letters sent by the dealers. Asset managers want to address practical questions as they move ahead with the new novation process. In this regard, The Asset Managers Forum has scheduled a conference call on Monday, November 21, 2005 to facilitate constructive dialogue concerning adherance to the Protocol by all parties.
Click here to read the Conference Call Announcement
Longer Term Solution for Derivatives
In addition, the dealers have agreed to work with the Asset Managers Division and other client associations on a longer-term novation solution for all market participants. In this regard, the Division will meet on Tuesday, November 22 to discuss the asset management industry's expectations relating to the future of swaps processing.
Building Relationships
With regard to the aforementioned items, the Asset Managers Division has established working relationships with the Group of 14 Dealers and other groups such as ISITC and ISDA (through the AMF). These relationships are critical to the success of future industry initiatives insofar as they ensure a unified and comprehensive perspective which includes dealers, custodians, industry utilities, and vendors that provide electronic and automated services.