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On March 6, the International Swaps and Derivatives Association (ISDA) published for public comment some proposed amendments to the 2014 ISDA Credit Derivatives Definitions to address the issue of “narrowly tailored” or “manufactured” credit events. This type of credit event came under scrutiny by ISDA because of a few situations in which a company was apparently induced to default on some of its debt in return for advantageous financing, thus creating a credit event for purposes of credit derivatives referencing the company even though the company was not in actual economic distress.
Continue Reading ISDA Proposes Amendments To Counter “Manufactured” Credit Derivative Defaults

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.
Continue Reading ISDA Publishes 2018 Benchmark Supplement Protocol

On July 30, the Association of Financial Markets in Europe (AFME) and the International Swaps and Derivatives Association, Inc. (ISDA) released a paper outlining the challenges UK and EU firms will face in relation to legacy over-the-counter (OTC) derivative contracts following the United Kingdom’s departure from the European Union (Brexit).
Continue Reading AFME and ISDA Publish Paper on Brexit Contractual Continuity Issues in OTC Derivatives

On July 12, the International Swaps and Derivatives Association (ISDA) published a document entitled Consultation on Certain Aspects of Fallbacks for Derivatives Referencing GBP LIBOR, CHF LIBOR, JPY LIBOR, TIBOR, Euroyen TIBOR and BBSW (Bank Bill Swap Rate) that is intended to solicit market input on how the derivatives markets can best create alternatives to the interbank offered rates (IBORs) currently referenced in derivatives transactions. This is one of many current market initiatives that are responding to the likelihood that many IBORs will cease to be published or cease to have appropriate liquidity after 2021 and must therefore be replaced by new benchmark rates based on the overnight risk-free rates (RFRs) that are being adopted for each major currency.
Continue Reading ISDA Publishes IBOR Replacement Consultation

On January 8, the International Swaps and Derivatives Association, Inc. (ISDA) published a blog post providing insight into how it is preparing for the UK’s departure from the European Union and how this will impact the use of the industry-standard ISDA Master Agreement.
Continue Reading ISDA Announces Plans for French and Irish Law Governed Master Agreements After Brexit

On September 5, the regular settlement cycle for most securities transactions in the United States will change from three days (T+3) to two days (T+2). In order to assist derivative market participants that have existing equity derivative transactions with payment dates based on T+3, the International Swaps and Derivatives Association (ISDA) has developed the 2017 OTC Equity Derivatives T+2 Settlement Cycle Protocol (“T+2 Protocol”).
Continue Reading ISDA To Publish T+2 Protocol

As part of a global regulatory initiative, the United States, European Union, Canada, Switzerland, Japan, Hong Kong, Singapore and Australia have all adopted, or are in the process of adopting, rules (Margin Rules) that impose mandatory variation margin requirements on non-cleared swaps and, in some cases, non-cleared security-based swaps and FX derivatives (collectively, “Covered Trades”). Starting March 1, any entity that is a financial end user (FEU) will only be able to execute a Covered Trade with a US swap dealer if it has amended its swap documentation to comply with the requirements applicable to the dealer under the Margin Rules.
Continue Reading 40 Days Left Until Compliance Date for Variation Margin Rules for Uncleared Swaps

On August 23, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk (the Divisions) issued a response to the International Swaps and Derivatives Association (ISDA), which had requested the CFTC to clarify whether a covered swap entity (CSE) is permitted to include security-based swaps within the same product set as swaps for the purpose of calculating initial margin for uncleared swaps.
Continue Reading CFTC Issues No-Action Letter Regarding Use of Security-Based Swaps in Initial Margin Calculations for Uncleared Swaps

On May 5, the International Swaps and Derivatives Association, Inc. (ISDA) launched the ISDA Resolution Stay Jurisdictional Modular Protocol (Protocol), which is designed to assist market participants in complying with new regulations governing the cross-border enforceability of stays on contractual termination rights. The Protocol was developed in reaction to new regulatory changes, such as a framework established by the Financial Stability Board, whereby various national regulators are requiring certain banks in their jurisdiction to obtain counterparty consent for statutory stays on early termination rights, regardless of the contract’s governing law. These changes are designed to reduce the uncertainty regarding the cross-border enforceability of such stays.
Continue Reading ISDA Launches Protocol Regarding Cross-Border Enforceability of Stays on Contractual Termination Rights

On February 24, the International Swaps and Derivatives Association Inc. (ISDA) published Principles for US/EU Trading Platform Recognition (Principles), which set out certain key principles and policy considerations that ISDA believes should facilitate comparability determinations and mutual recognitions between US and EU execution platforms. Notably, the Principles are primarily addressed to the US Commodities Futures Trading Commission (CFTC) in respect of the CFTC’s comparability assessment of the EU regulatory framework applicable to regulated markets (RMs), multilateral trading facilities (MTFs) and organized trading facilities (OTFs).
Continue Reading ISDA Publishes Principles for US and EU Trading Platform Recognition