Asset Management Attorneys Discuss COVID-19’s Impacts on Swaps and Derivatives in Bloomberg News
In a March 19 Bloomberg News article titled “Swaps Losses Are Next Worry With Asset-Value Reports Coming Due,” asset management partner Isabel Dische and asset management counsel Molly Moore discuss how market volatility precipitated by the COVID-19 crisis may impact the swaps and derivatives market, as investors must file end-of-the-month reports. If positions fall a certain amount in a certain time period, dealers can either close the positions or demand more collateral, said Molly. The assets underlying much of the swaps market -- such as interest rates, corporate creditworthiness, oil prices and currencies -- took a beating in the past two weeks amid the coronavirus pandemic. That is creating serious margin calls for investors who use derivatives to hedge risk or speculate in markets, said Isabel.