He will also be accustomed to assessing the credit risk, exchange risk, country risk and counterparty risk of those counterparties with whom he deals.
Liquidity, particularly on the power exchanges, did however increase as market participants sought to offset any potential counterparty risk exposure.
That depends upon the type of business the firms are doing and the sort of counterparties with which they are dealing.
I understand that this change will reduce the practical problems for large listed institutions in keeping their records of eligible counterparties up to date.
My next area of concern is that of a central counterparty.
Unwinding or replacing the transactions would lead to enormous disruption of markets and unpredictable cost to the counterparties.
That may be confusing and our original proposal was to substitute the word "purchaser"with the word"counterparty".
In a first stage, we will present legislation to standardise eligible derivatives contracts, putting them through central counterparty clearing that is properly regulated and supervised.
