Locomotive Act

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The Locomotive Act 1865 (also known as the “Red Flag Act”) was introduced as a result of the increasing popularity of self-propelled traction engines (known then as “road locomotives”) on British public thoroughfares after 1850. Among other things the Red Flag Act stipulated that any road locomotives should have a crew of at least three and, if towing carriages, a fourth should walk at least 60 yards in front of the vehicle waving a red flag to warn fellow road users of the incipient danger. Road locomotives were not allowed to travel faster than 4 mph on the open road.

This worked passably well until Karl Benz invented the motorwagen in Mannheim in 1885, at which point the potential for screaming along an autobahn at 240 mph suddenly outweighed the practical benefit the Red Flag Act offered.

I mention this really only for its metaphorical power which will, one day, become apparent to financial regulators who presently think it is prudent to oblige lawyers to walk 60 yards in front of their clients’ master trading agreements waving opinions on the enforceability of their close-out netting provisions, but doesn’t appear to have yet.