Phased deadlines for mandatory clearing requirements have now been set. Market participants should work with their FCMs to ensure that they have OTC clearing documentation in place in advance of the compliance deadlines.
Phased deadlines for mandatory clearing requirements have now been set. Market participants should work with their FCMs to ensure that they have OTC clearing documentation in place in advance of the compliance deadlines.
Many Seinfeld fans will recall the angst felt by George Costanza when two of his worlds began to collide (in George’s case, his “relationship world” and his “friends world”). Some newcomers to swap clearing may be similarly concerned when they realize that their cleared swaps will not be governed by the familiar, tried and true ISDA master agreement that governs their uncleared swaps; instead they must become comfortable with new industry documentation that has emerged from the collision of the swaps and futures clearing worlds in the United States.2 This article is intended to explain the basis for this new documentation and provide an overview of its architecture and contents.
Earlier this week ISDA published the ISDA August 2012 DF Protocol (the “DF Protocol”), which is now open for adherence.
In response to Eurozone concerns, ISDA recently published its Illegality/Force Majeure Protocol, which is now open for adherence. What It Does: This Protocol enables parties to 1992 ISDA Master Agreements to incorporate the illegality and force majeure provisions of the 2002 ISDA Master Agreement. Why: This Protocol is intended to provide parties transacting under 1992… Continue reading Eurozone Contingency Planning: ISDA’s Illegality/Force Majeure Protocol – Teigland-Hunt LLP Client Alert
Although the timeline for mandatory clearing of swaps under the Dodd-Frank Act narrows, bilaterally negotiated OTC derivatives remain, and will continue to remain, relevant. The parties to non-cleared OTC transactions will need to negotiate an ISDA Master Agreement to govern the general non-trade specific terms of such transactions: Default, Termination, Netting and also more mundane matters such as notice and governing law provision must be addressed. This article reviews which of the ISDA Master Agreements may be most appropriate, the main differences between them and provides an analysis of the central provisions that arise in the negotiation thereof.
While the prospect of mandatory clearing is looming market participants continue to enter into over-the-counter derivative trades bilaterally under an ISDA Master Agreement. This Part I of the article discusses the origins of the ISDA Master Agreements, the architecture of the standardized documentation (including that it forms a single agreement), and the risk and compliance considerations that should be taken into account prior to entering into an ISDA Master Agreement and also during the course of a trading relationship documented under such agreement.