What does the Model Code say about netting?
A) Market participants are strongly recommended to net bilateral transactions with counterparties where activity justifies it.
B) Market participants should establish payments netting agreements with cross-border counterparties where activity justifies it.
C) Market participants should establish legally viable bilateral netting agreements with counterparties where activity justifies it.
D) Market participants should establish legally viable multilateral netting agreements where activity justifies it.

Question

Quizplus · Accepted Answer

The Model Code recommends that market participants establish legally viable bilateral netting agreements with counterparties where activity justifies it. While payments netting agreements (option B) and multilateral netting agreements (option D) may also be beneficial in certain situations, the Model Code specifically mentions bilateral netting agreements as a recommended practice. Option A is not a correct answer because it uses the word "recommended" instead of "should establish", which implies a stronger commitment.

What Does the Model Code Say About Netting