Collateral and credit support

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Financial derivative transactions contain a number of risks, two of which are common to most forms of transactions. The first risk is that the other party will not pay what is due, or otherwise perform its obligations. In a worst case scenario, this would be due to that party’s insolvency. The second risk occurs in financial derivative transactions with regular payment dates. During the life of the transaction but in the periods between those payment dates, amounts are due but not payable until that date: this creates a credit exposure with a risk that the insolvency of one party before the next payment date means that the other party cannot recover what was due to it for that period.

As with other forms of credit risk, the exposed party will look to the other party to provide an acceptable form of security in order to remove or reduce that risk. This is common where one party may have a stronger credit status than

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Latest Banking & Finance News

Banking and Finance weekly highlights—17 July 2025

This week's edition of Banking and Finance weekly highlights includes: (1) FCA publishes final stripped-back rules to help companies raise capital and boost growth; (2) analysis in the Vietjet Aviation Joint Stock Company case which examined the importance of ensuring that the security document clearly states whether the lender may exercise assigned rights prior to the security becoming enforceable; and (3) ISDA launches Notices Hub and protocol to streamline delivery and receipt of critical notices.

FCA issues Primary Market Bulletin 56

The Financial Conduct Authority (FCA) has issued Primary Market Bulletin 56. The bulletin outlines the FCA’s use of transaction and position data to monitor compliance with reporting obligations under the UK Market Abuse Regulation (UK MAR), including directors’ dealings. It highlights enforcement action taken against a former Person Discharging Managerial Responsibilities (PDMR) at Wizz Air Holdings Plc, who failed to notify 115 transactions, including trades during closed periods, resulting in a £123,500 fine. The bulletin also reminds issuers of the upcoming expiry on 29 July 2025 of transitional provisions under the UK Listing Rules (UKLR), including those for inflight applicants and shell companies and the need to ensure compliance with eligibility and operational requirements. Issuers are also reminded to provide up-to-date contact details as required. In addition, the FCA has announced plans to enhance the National Storage Mechanism and launched a user survey to support improvements to data accessibility.

ESMA defers changes to disclosure framework for private securitisations

The European Securities and Markets Authority (ESMA) has published a Feedback Statement summarising responses to its February 2025 consultation on a simplified disclosure template for private securitisations under Article 7 of the Securitisation Regulation (Regulation (EU) 2017/2402). The proposed template aimed to reduce reporting complexity and to better reflect the bilateral nature of private transactions. While stakeholders generally supported the objective of simplification, most respondents advised against proceeding with the amendments at this stage, citing the ongoing review of the Level 1 framework and the risk of regulatory misalignment. ESMA has therefore decided to defer any changes to the technical standards until key concepts under Level 1 are clarified.

ISDA launches Notices Hub and protocol to streamline delivery of critical notices

The International Swaps and Derivatives Association (ISDA) has launched the ISDA Notices Hub and the ISDA 2025 Notices Hub Protocol to provide a digital alternative for delivering time-sensitive notices under the ISDA Master Agreement. The initiative is intended to support more efficient and reliable delivery of termination notices and waivers, particularly in circumstances where physical delivery may be delayed or impractical. The ISDA Notices Hub, developed in collaboration with S&P Global Market Intelligence, is a secure online platform that facilitates the exchange of critical notices and centralises address updates. The accompanying protocol enables firms to amend their documentation to allow use of the Hub, with 79 entities having adhered at launch. The platform is available at no cost to buy-side firms, with discounted access for dealers during the initial period. Features include automated notifications and a single-entry system for updating delivery details across agreements.

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