On December 10, the International Swaps and Derivatives Association (ISDA) introduced its latest market protocol, the 2018 Benchmark Supplement Protocol, which is designed to give market participants an efficient means to incorporate terms from the ISDA Benchmark Supplement into their existing and/or future derivative transactions.
The Benchmark Supplement, published in September, enables parties to include certain triggers and generic fallbacks in transactions which reference benchmarks and incorporate one or more of the following ISDA definitional booklets:
- 2006 ISDA Definitions
- 2002 ISDA Equity Derivatives Definitions
- 1998 FX and Currency Option Definitions
- 2005 ISDA Commodity Definitions
The Benchmark Supplement was produced primarily in order to address certain requirements under the EU Benchmarks Regulation. However, parties may also choose to incorporate the Benchmarks Supplement in light of the International Organization of Securities Commissions’ “Statement on Matters to Consider in the Use of Financial Benchmarks,” or if they otherwise consider that doing so will enhance the contractual robustness of relevant transactions.
Parties can amend their contracts to incorporate the Benchmark Supplement by adhering to the new Protocol and exchanging questionnaires that detail the exact scope of the incorporation.
The text of the Protocol is available here.
A helpful FAQ concerning the Protocol is available here.