NOS has successfully netted USD 300 mill of FFA OTC contracts

Serious credit stress was avoided through multilateral cash netting towards NOS. 38 FFA traders signed netting agreements for the October contracts and NOS expects the number of participating traders to increase when the November contracts are to be settled. In order to help market participants to reduce the counterpart and default risk, NOS decided to offer tailor made settlement services in order to assist in unwinding the bilateral exposure chains in the market. This was achieved by using the NOS netting and settlement system. A member with expected total receivables of 10 million and expected payments of 9 million, effectively receives one single settlement of 1 mill from NOS Clearing. The possible breaking of payment chains would otherwise increase the risk of break-down in the FFA market. NOS Clearing entered into agreements with both existing and new clients, and a Bilateral Netting Desk was established last week. Within less than 2 weeks from the offer, all settlements were successfully booked at the clients accounts without any defaults.