Posted on 16 March 2009
The International Swaps and Derivatives Association (ISDA) has launched its Auction Settlement Supplement and Protocol, the final stage of the process known as “hardwiring”, or the incorporation of auction settlement system terms into standard credit default swap (CDS) documentation. Key parts of the process include the following:
- auction settlement provisions that eliminate the need for credit event protocols;
- resolutions of the Determinations Committees, comprising dealer and buy-side representatives (e.g. to determine whether credit events have taken place); and
- credit and succession event backstop dates that institute a common standard effective date for CDS trades.
These developments will introduce greater certainty to transactional, operational and risk considerations for the treatment of CDS.
Related Link: Press release
