Month: June 2009

U.S. Department of Treasury Announces Framework for Regulatory Reform of OTC Derivatives Markets

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On May 13, 2009, the U.S. Department of the Treasury (the “Treasury Department”) announced a framework for regulatory reform (the “Reform Framework”) relating to over-the-counter (“OTC”) derivatives transactions. In announcing the Regulatory Framework, the Treasury Department noted that recent events have brought to light that “massive risks in derivatives markets have gone undetected by both regulators and market participants” and that, even if such risks had been more transparent, “regulators lacked the proper authorities to mount an effective policy response” to combat those risks. READ MORE →

ISDA Publishes U.S. Wind Event Confirmation

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On May 19, 2009, ISDA published a template U.S. Wind Event Confirmation (the “Wind Confirmation”), intended to standardize natural catastrophe swaps that reference certain wind-related events occurring in the United States (or in a specified subset of the United States), known as “USA Wind Events.” This form of confirmation may be used by market participants both to hedge losses from natural catastrophes as well as to gain exposure to wind-related risk. READ MORE →

Industry Groups Respond to NCOIL Model Legislation for Regulation of Credit Default Swaps

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In a letter dated May 22, 2009 to the Chairman of the Task Force on Credit Default Swaps Regulation of the National Conference of Insurance Legislators (“NCOIL”), ISDA and the Securities Industry and Financial Markets Association (“SIFMA”) commented on NCOIL’s proposed model legislation (the “Model Legislation”) to regulate credit default swaps (“CDS”). NCOIL drafted the Model Legislation based on the provisions of Article 69 of the New York Insurance Law relating to financial guaranty insurance. READ MORE →

2009 European Cancellable Form Loan CDS Protocol

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On May 15, 2009, ISDA announced the launch of the 2009 European Cancelable Form Loan CDS Protocol (the “Protocol”), which amends the Settlement Method provisions of certain existing single-name and index CDS transactions in contracts between adhering parties. The adherence period for the Protocol ran until May 22, 2009.

The Protocol covers two types of CDS transactions, (i) “Covered Legacy Transactions,” which includes CDS transactions entered into under confirmations incorporating either leveraged loan supplements or the iTraxx® LevX® standard terms supplement and (ii) “Covered Edscha Transactions,” which includes CDS transactions that would otherwise be defined as Covered Legacy Transactions but specify Edscha AG as the reference entity. The Protocol amends the terms of Covered Transactions between adhering parties to provide, in certain circumstances, for settlement in accordance with the “Market Settlement Mechanism,” which is the Cancelable ELCDS Auction Settlement Terms published by ISDA and International Index Company Ltd. (or any successor thereto) (or, in the case of Covered Edscha Transactions, the auction settlement terms published on or before May 15, 2009 in respect of transactions referencing certain loan obligations of Edscha AG). For additional information relating to the Protocol, you may refer to the text here.