An International Swaps and Derivatives Association survey showed around 70% of the 20 major credit derivatives participants in Japan were in favor of dropping restructuring as a credit event from credit derivatives documentation, but dealers are unlikely to cut the clause. "Even though they voted for this it's unlikely it will happen anytime soon--they voted for modified restructuring as well and that died after a week," said one credit trader. Dealers attempted to introduce the modified restructuring credit event in October 2001 but failed due to a lack of end user interest (DW, 10/21/01).
"We've been a vocal advocate for no restructuring, it would be the easiest solution," said James Mudie, deputy general manager in the structured trading division at Shinsei Bank in Tokyo.
Tomoko Morita, assistant director of policy at ISDA in Tokyo, said it will look to conduct another poll on the issue in May after the next consultation paper from the Basel Committee. The next poll will likely be broader-based to include hedgers as well as investors.
"[The switch] will happen faster if there is a dramatic event that raises questions [about the existing language], like Xerox," said Nobukazu Saeki, manager in the derivatives and structured products division at Bank of Tokyo-Mitsubishi in Tokyo.
