Against the backdrop of impending comprehensive regulation of the derivatives marketplace, on November 10, 2009, the International Swaps and Derivatives Association, Inc. (“ISDA”) recommended common principles (the “Principles”) for “give-up” arrangements to facilitate the negotiation of relevant agreements across different clearing platforms with central counterparties (“CCPs”). The Principles were derived from a series of meetings among representatives of prospective customers, dealers and clearing houses. In preparing the Principles, the drafting group acknowledged that its recommendations may be affected by the evolution of pending derivatives legislation. READ MORE →

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 →

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.

On April 8, 2009, the International Swaps and Derivatives Association, Inc. (“ISDA”) announced the successful implementation of its 2009 ISDA Credit Derivatives Determinations Committees and Auction Settlement CDS Protocol (known as the “Big Bang Protocol”). Implementation of the Big Bang Protocol was the final step in the important industry initiative to incorporate (commonly referred to as “hardwire”) auction settlement terms into standard credit default swap (“CDS”) documentation. According to ISDA, over 2,000 parties signed up to the Big Bang Protocol, after an almost month-long period during which market participants could elect to adhere to its terms. READ MORE →

ISDA announced the results of two of its recent surveys, the 2009 Margin Survey (the “Margin Survey”) and the survey of derivatives usage by the world’s 500 largest companies (the “Derivatives Usage Survey”), at its 24th Annual General Meeting in Beijing at the end of April. The Margin Survey results were not surprising in light of the ongoing credit crisis. In particular, the survey reported an increase of almost 86% in the use of collateral in privately-negotiated derivatives transactions over last year’s survey, or approximately $4.0 trillion in collateral currently in circulation. Cash remained the dominant item of collateral being delivered, amounting to 84% of the collateral reported received. The results of the Margin Survey were derived from the responses of 67 firms, 58 of which are banks or broker-dealers. READ MORE →