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What Is the Legal Implication of Novation on the Original Trade Terms?

The original contract is legally discharged, but key trade terms (price, quantity, expiration) are preserved in the two new contracts with the CCP.
Greeks.Live23.11.25

What Is the Legal Implication of Novation on the Original Trade Terms?

Upon novation, the original contract between the two market participants is legally discharged. The terms of the trade, such as the price, quantity, and expiration, are preserved in the two new contracts with the CCP.

The primary legal change is the substitution of the counterparty from the original firm to the CCP.

How Does ‘Novation’ Change the Legal Relationship between Trading Parties in a CCP Environment?
How Does Novation by a CCP Mitigate Settlement Risk in Derivatives?
What Is the Concept of ‘Novation’ in the Context of a Central Counterparty Clearing?
What Is Novation in the Context of a Clearinghouse?

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