Derivatives houses, including JPMorgan, Deutsche Bank and Barclays Capital, have started serving and receiving notices on credit-default swaps referenced to Marconi, according to firm officials and traders. However, the saga is not over yet as protection buyers have 30 days after serving the notice to give a notice of intended physical settlement, in which they can detail what they plan to deliver as the defaulted obligation. There is still debate about which of Marconi's assets will satisfy the contingent liability rules and qualify as a deliverable obligation.
One credit lawyer said he disagreed that Marconi satisfied the bankruptcy criteria in default swaps. He said the major firms have started serving each other notices without problems because most of them have flat positions so will just pass the trade through, but the real arguments will start when the end sellers of protection get called upon.
