The International Swaps and Derivatives Association is in talks with banks over whether the U.S. over-the-counter derivatives markets should close on Friday along with the exchanges, which are shuttering to mark the funeral of former President Ronald Reagan. ISDA will likely put out a statement to clarify the position of the OTC markets as there is no regulatory body to do this, noted Louise Marshall, policy director in New York.
The close of markets in the U.S. on Friday will affect contracts that expire on that day. Deals due to close on Friday in the U.S. will likely be settled a day early or on the following Monday, said Paul Harding, managing director at Derivatives Documentation Ltd in London. However, “It could be similar to the unexpected bank holiday in May 1995 in Europe when there were some disputes over confirmations,” noted Harding.
