Sat, Jun 25, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

FIA and ISDA publish documentation for cleared swaps

Friday, June 17, 2011

Michael Dawley
Opalesque Industry Update - The Futures Industry Association and the International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of the FIA-ISDA Cleared Derivatives Execution Agreement as a template that can be used by participants in the cleared swaps markets in negotiating execution-related agreements with counterparties to over-the-counter derivatives that are intended to be cleared.

The agreement was developed with the assistance of a committee comprised of representatives from both buy-side and sell-side firms with expertise in both futures and OTC derivatives. More than 60 organizations provided input during the development of this document.

Michael Dawley, FIA chairman and managing director, Goldman Sachs, said: We expect that this agreement will help provide a sound foundation for the expanded use of clearing in the global OTC derivatives marketplace. We are very pleased that this industry initiative has come to fruition and we thank all the members of the working group for their contributions to the development of this important agreement.

Stephen OConnor, ISDA chairman and managing director, Morgan Stanley, said: Encouraging greater use of central clearing by all market participants is one of the important ways in which ISDA works to ensure safe, efficient OTC derivatives markets. This agreement marks further progress toward that goal.

Richard Prager, managing director and head of global trading, BlackRock, said: "The derivatives industrys collaborative effort has resulted in a modular give-up document that meets the needs of all market participants, promotes deep, liquid and efficient market structure and supports principles of the Dodd-Frank Act."

The FIA and ISDA believe that this agreement will support the adoption of central clearing in the global derivatives markets by providing a model for the legal documentation supporting derivatives clearing. The FIA and ISDA emphasize that the use of the agreement is voluntary; i.e., there is no requirement, regulatory or otherwise, for any market participant to use this agreement. The agreement is being published as a template for participants to use as they see fit, and may not be necessary or appropriate under all circumstances.

This agreement lays out the procedures by which a trade is submitted for clearing, including the obligations for each party to affirm the trade within prescribed time limits. The agreement clarifies that once a trade is accepted for clearing, each party's agreement with its clearing firm will govern and neither party to this agreement has any further obligation to the other. Second, it establishes the rights and obligations of the parties in the event that a trade is not accepted for clearing. Third, the agreement includes optional annexes for those parties that want a clearing firm to be party to the agreement. The agreement is clearinghouse-neutral.

The agreement attempts to provide some initial structure for documentation governing the execution of cleared swaps pending full implementation of the reforms mandated by the Dodd-Frank Act in the U.S. and similar reforms in other parts of the world. The FIA and ISDA recognize that many provisions in the agreement will be superseded by new regulatory requirements as well as the specific rules ofindividual swap execution venues and clearing organizations. Until cleared swap market rules and regulations have been adopted and implemented, the agreement sets out certain terms and conditions thatmarket participants who enter into execution agreements may consider. This is the first version of the document; FIA and ISDA expect that the agreement will be updated and enhanced over time as the market for cleared swaps continues to evolve.

The publication of this agreement builds on previous initiatives by both the FIA and ISDA to provide the derivatives industry with model agreements and standardized legal documentation, such as the FIA International Uniform Brokerage Execution Services Agreement and the ISDA Master Agreement.

Full press release: Source
PD

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Global markets fell, hedge funds gain in mid-June on Brexit, Fed rate concerns[more]

    Komfie Manalo, Opalesque Asia: Global financial markets declined through mid-June, as uncertainty associated with the upcoming Brexit referendum and expected U.S. Fed interest rate hike contributed to increases in volatility across asset classes, data provider