FIA and ISDA have responded to a consultation from the Canadian Derivatives Clearing Corporation (CDCC) on rule changes regarding skin in the game (SITG).
In the response, the associations raise concerns about the lack of clarity on automatic replenishment and the discretion given to CDCC in setting the size and how SITG would be used in non-default loss scenarios. The response recommends a size more proportional to the default fund to better align incentives, as well as the inclusion of a second tranche of SITG.
Read the response.
