Netting opinion: Difference between revisions

Now what precedes is a polemic, we confess. Some may scorn it as a cavalier view. “Just because we are paranoid, does not mean no-one is following us,” they will say, and they may well be right. Perhaps we should thank the [[Basel Committee]] for vouchsafing [[close-out netting]] all this time: that we can’t ''see'' [[Elephant|elephants hiding upside down in the custard]] may be down to their disguise, not their absence.

But okay, then try this: netting opinions are, still, a ''regulator-mandated prudential protection''.  Like [[Emission allowances|carbon credits]], they don’t exist in the wild. The [[Basel Committee]] conceived the regime, and its “written, reasoned opinions”, then dumped it unchaperoned on the market. It took no responsibility: here you are, folks: you work out what this means. The banks had no particular view on the format of these opinions, but the legal community did. There is — clearly, joyfully, ''gleefully'' — no end of nuance that those from [[Negotiator|the guild of opinion writers]] can inject into their reasoned analyses. Netting opinions mutated into three-hundred page monsters. The labour of making sense of these tracts falls upon the institutions.

The Basel Committee cannot see this. It does not care about it. It made this problem, but it does not have to deal with it.

Ask the Basel Committee, itself, to centralise and own the process. Suggest it mandates and commissions the necessary opinions itself, and uses them to decree, annually, for all, with which counterparty types one can obtain netting. This can be issued as a simple matrix of yesses or noes: the institutions can see, but need not concern themselves about, the precise rationale. The playing field is level; opinions are gathered once, and they apply worldwide. There is also transparency here: a central, authoritative source, and an impartial standard to which emerging markets can appeal, and against which they can measure their commercial regulations to put them in fit state for international finance.