Click to visit the Protocol webpage
NEWS RELEASE
For Immediate Release
ISDA Publishes 2012 US Municipal Reference Entity CDS Protocol
NEW YORK, March 5, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced the launch of the 2012 US Municipal Reference Entity CDS Protocol.
The purpose of the Protocol is to make similar changes to US Municipal CDS transactions as were made to corporate and sovereign CDS by the 2009 ISDA Credit Derivatives Determinations Committees and Auction Settlement CDS Protocol (‘Big Bang’ Protocol). The Protocol will align the US municipal CDS market with the corporate and sovereign CDS markets.
The Protocol will incorporate auction settlement terms into standard documentation for new and existing US Municipal CDS trades. These terms include the following:
First, addition of the concept of auction settlement as a settlement method that eliminates the need for physical settlement of US Municipal CDS transactions.
Second, incorporation of the resolutions of the ISDA Credit Derivatives Determinations Committee for the Americas (DC) into the terms of standard US Municipal CDS contracts. The DC comprises dealer and buy-side representatives and makes binding determinations for issues such as whether a credit event has occurred; whether an auction will be held; and whether a particular obligation is deliverable. Information related to the DC is available at www.isda.org/credit.
And third, addition of credit event and succession event “look back” provisions (or backstop dates) that institute a common standard effective date for US Municipal CDS transactions.
The adherence period for the Protocol will run until Monday, April 2. The market practice changes set out in the Protocol will take effect on Tuesday, April 3.
The Protocol is open to ISDA members and non-members alike. The text of the Protocol and form of adherence letter, guidance on the mechanics of the Protocol, answers to frequently asked questions and details on adherents, are available on ISDA’s website.
For Press Queries, Please Contact:
Lauren Dobbs, ISDA New York, +1 212 901 6019, ldobbs@isda.org
Rose Millburn, ISDA London, +44 203 088 3526, rmillburn@isda.org
Donna Chan, ISDA Hong Kong, +852 2200 5906, dchan@isda.org
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