Australian fund managers seek collateral from banks in swap deals

Sydney

AUSTRALIAN fund managers are flexing their muscles against long-dominant investment banks, demanding the banks provide them with more equitable protection in the A$29 trillion (S$29.75 trillion) credit and interest-rates swaps market.

Investment funds are stipulating that banks post collateral in over-the-counter derivatives agreements to protect funds should a bank become insolvent, and are widening the classes of collateral they themselves wish to post.