ISDA’s determinations committee was formed in 2009 and makes binding decisions for the market on whether contracts can be triggered. The 15-member group includes representatives from Bank of America Corp., Elliott, Morgan Stanley and JPMorgan Chase & Co.
The International Swaps and Derivatives Association (ISDA) is a trade organization of participants in the market for over-the-counter derivatives. It is headquartered in New York, and has created a standardized contract (the ISDA Master Agreement) to enter into derivatives transactions. In addition to legal and policy activities, ISDA manages FpML (Financial products Markup Language), an XML message standard for the OTC Derivatives industry. ISDA has more than 820 members in 57 countries; its membership consists of derivatives dealers, service providers and end users.[1]
News need to follow up:
2014 ISDA Credit Derivatives Definitions
The 2014 ISDA Credit Derivatives Definitions are an updated and revised version of the 2003 ISDA Credit Derivatives Definitions, a document that contains the basic terms used in the documentation of most credit derivatives transactions. ISDA published the 2014 ISDA Credit Derivatives Definitions in February 2014, and trading using the new Definitions is scheduled to begin on September 22, 2014.
Personal Notes: it is focus on the CDS product (credit default swap)
4. What are some of the important changes under the 2014 Definitions?
The 2014 Definitions are a new standard for CDS transactions, with changes throughout.
These FAQs do not attempt to summarize the changes, but identify some of the key areas
of change as detailed below.
The 2014 ISDA Credit Derivatives Definitions introduce several new terms, including:
Bail-in/financial terms for credit default swap (CDS) contracts on certain financial
reference entities: incorporates a new credit event triggered by a government-initiated
bail-in and a provision for delivery of the proceeds of bailed-in debt or a restructured
reference obligation, and more delineation between senior and subordinated CDS.
Sovereign CDS asset package delivery for CDS contracts on sovereign reference
entities: introduces the ability to settle a credit event by delivery of assets into which
sovereign debt is converted.
Standard reference obligation: allows for the adoption of a standardized reference
obligation across all market-standard CDS contracts on the same reference entity and
seniority level.
In addition to these new terms, the 2014 ISDA Credit Derivatives Definitions contain
several amendments to standard credit derivatives trading terms, including: upgrading
provisions dealing with transfers of debt to successor reference entities; expanding
the scope of guarantees that can be hedged with CDS; rationalizing the treatment of
contingent debt and guarantee obligations; addressing currency redenomination
issues; and adjustments to the restructuring settlement mechanism.
20. Will novations of 2003 Definitions transactions be affected?
No. Transactions may not be novated from 2003 Definitions to 2014 Definitions during
the course of the novation. Parties may wish to make that amendment subsequent to the
completion of novation.
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