Updated March 10th, 2020

ISDA 2018 U.S. Resolution Stay Protocol (ISDA U.S. Stay Protocol)

ISDA has prepared this list of frequently asked questions to assist in your consideration of the ISDA U.S. STAY PROTOCOL.

THESE FREQUENTLY ASKED QUESTIONS DO NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE ISDA U.S. STAY PROTOCOL.  PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE ISDA U.S. STAY PROTOCOL.  ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT.

The same working group that helped develop, in consultation with regulators, the operative provisions of the ISDA 2014 Resolution Stay Protocol (ISDA 2014 Stay Protocol), the ISDA 2015 Universal Resolution Stay Protocol (ISDA 2015 Universal Stay Protocol) and the ISDA Resolution Stay Jurisdictional Modular Protocol (ISDA Jurisdictional Modular Protocol) also developed the ISDA U.S. Stay Protocol.  All of these protocols aim to achieve the same policy goals with respect to the orderly resolution of systemically important financial institutions.

The ISDA U.S. Stay Protocol was created to allow market participants to comply with regulations issued by the Board of Governors of the Federal Reserve System (FRB) (12 C.F.R. §§ 252.81-88), the Federal Deposit Insurance Corporation (FDIC) (12 C.F.R. §§ 382.1-7) and the Office of the Comptroller of the Currency (OCC) (12 C.F.R. §§ 47.1-8) (collectively, the U.S. Stay Regulations).  The U.S. Stay Regulations impose requirements on the terms of swaps, repos and other qualified financial contracts (QFCs) of global systemically important banking organizations (G-SIBs).

The ISDA U.S. Stay Protocol enables Entities Subject to U.S. Regulations (as defined below) and their counterparties to amend the terms of the covered agreements between them (unless they are excluded or exempted) to:

• Expressly recognize existing limits on the exercise of default rights by counterparties under the Orderly Liquidation Authority provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (OLA) and the Federal Deposit Insurance Act (FDI Act) as well as the powers of the FDIC under OLA and the FDI Act to transfer contracts; and
• Limit the ability of counterparties to exercise default rights related, directly or indirectly, to affiliates of Entities Subject to U.S. Regulations (as defined below) entering into insolvency proceedings (including under the U.S. Bankruptcy Code) and permit the transfer of related credit support provided by a covered affiliate in such a resolution scenario.

The U.S. Stay Regulations provide a safe harbor for compliance by way of the ISDA 2015 Universal Stay Protocol or a “U.S. protocol” as described in the U.S. Stay Regulations.  ISDA developed the ISDA U.S. Stay Protocol based on the requirements for a safe harbored “U.S. protocol” under the U.S. Stay Regulations.

The ISDA U.S. Stay Protocol is a standalone protocol with its own operative provisions, separate from those of the ISDA 2014 Stay Protocol, the ISDA 2015 Universal Stay Protocol and the ISDA Jurisdictional Modular Protocol, each of which were developed in advance of the adoption of the U.S. Stay Regulations.  In addition, while the ISDA U.S. Stay Protocol is based on the terms of the ISDA 2015 Universal Stay Protocol, certain provisions of the ISDA 2015 Universal Stay Protocol (and the ISDA 2014 Stay Protocol on which it was based) differ from the provisions of the ISDA U.S. Stay Protocol.  It is expected that most market participants will utilize the ISDA U.S. Stay Protocol, rather than the ISDA 2015 Universal Stay Protocol, to comply with the U.S. Stay Regulations; although, the ISDA 2015 Universal Stay Protocol, together with the Other Agreements Annex, is identified in the U.S. Stay Regulations as a safe harbored means of complying with the U.S. Stay Regulations.

Below are questions and answers that are designed to explain the basic operation and application of the ISDA U.S. Stay Protocol.  The questions and answers cover:

1. Who can adhere to the ISDA U.S. Stay Protocol?
   A. What kinds of entities can adhere to the ISDA U.S. Stay Protocol?
   B. Can entities that are not ISDA members sign up to the ISDA U.S. Stay Protocol?
   C. Can entities established outside the United States adhere to the ISDA U.S. Stay Protocol?
   D. Can natural persons adhere to the ISDA U.S. Stay Protocol?
   E. Can entities or natural persons that have not entered into an ISDA Master Agreement but have entered into other QFCs adhere to the ISDA U.S. Stay Protocol to amend such other QFCs?
2. What does the ISDA U.S. Stay Protocol do?
   A. What resolution regimes does the ISDA U.S. Stay Protocol Cover?
   B. What entities are Regulated Entities under the ISDA U.S. Stay Protocol?
   C. What agreements are Protocol Covered Agreements under the ISDA U.S. Stay Protocol?
   i. Does the ISDA U.S. Stay Protocol only cover new QFCs?
   ii. Will the ISDA U.S. Stay Protocol apply to all of my Protocol Covered Agreements if I adhere or just certain of them? Can I specify certain agreements for application of the ISDA U.S. Stay Protocol?
   D. Does a Regulated Entity have to amend its Protocol Covered Agreements with all Adhering Parties?
   E. Does an Adhering Party have to amend its Protocol Covered Agreements with all Regulated Entities?
   F. What does it mean for Protocol Covered Agreements to be "provided by" or "received by" an Adhering Party?
   G. What happens if an entity that was not a Regulated Entity when it became an Adhering Party later becomes a Regulated Entity?
3. How does the ISDA U.S. Stay Protocol relate to the ISDA 2015 Universal Stay Protocol?
   A. If I have adhered to the ISDA 2015 Universal Stay Protocol, do I still need to adhere to the ISDA U.S. Stay Protocol?
   B. Are the substantive terms of the ISDA U.S. Stay Protocol different from the ISDA 2015 Universal Stay Protocol?
4. When does the ISDA U.S. Stay Protocol become effective?
5. How do I adhere to the ISDA U.S. Stay Protocol?
   A. Is there a closing date for adherence to the ISDA U.S. Stay Protocol?
   B. How do I submit an Adherence Letter?
   C. Is adherence public?
   D. What is a conformed copy?
   E. Who is an authorized signatory?
   F. Can I change the text of the Adherence Letter?
   G. Are there any costs to adhere to the ISDA U.S. Stay Protocol?
   H. Can I revoke my adherence to the ISDA U.S. Stay Protocol?
6. How do investment/asset managers or other agents adhere on behalf of clients?
   A. How do I adhere as principal and on behalf of my clients?
   B. How do I adhere on behalf of all clients I represent?
   C. How do I adhere on behalf of some, but not all, clients I represent?
   D. How do I adhere on behalf of all the clients that I represent except for clients identified as excluded?
   E. How do I adhere on behalf of no current clients?
   F. What if I want to adhere on behalf of only one client?
   G. What happens if I add a client to an umbrella master agreement after adhering to the ISDA U.S. Stay Protocol?
   H. What is the Agent Representation?
   I. If an investment/asset manager or other agent has adhered on my behalf, which of my Protocol Covered Agreements are amended?
   J. If I wish to adhere to the ISDA U.S. Stay Protocol as principal, can my agent execute a single-entity adherence letter in my name on my behalf?
   K. If a general partner signs an agreement as the authorized signatory of a limited partnership, what entity must adhere to the ISDA U.S. Stay Protocol to amend such Protocol Covered Agreements?
   L. What happens if I enter into a new umbrella master agreement with a new client after adhering to the ISDA U.S. Stay Protocol?
   M. If I adhere to the ISDA U.S. Stay Protocol as principal, will this remediate all of my In-Scope QFCs, even those that were entered into by an agent on my behalf?
7. How does the ISDA U.S. Stay Protocol relate to the U.S. Stay Regulations?
   A. Are there other ways to comply with the U.S. Stay Regulations?
   B. Do the U.S. Stay Regulations apply retrospectively?

Specific Questions on the Amendment Language
   Section 1: Resolution Regime Provisions
   Section 2: Insolvency Proceeding Provisions

 You can download the full FAQ here.