Frequently Asked Questions

ISDA has prepared this brief summary of frequently asked questions to assist in your consideration of the ISDA 2009 European Loan CDS Protocol (the "Protocol").

THIS FREQUENTLY ASKED QUESTIONS DOES 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 PROTOCOL. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE PROTOCOL. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT.

Adherence Letter Submission Process

When do I need to send in my Adherence Letter?
The ISDA 2009 European Loan CDS Protocol is open between 9:00 a.m. New York Time on Tuesday January 20, 2009 and 5:00 p.m. New York Time on Friday January 30, 2009.  Any entity must email its Adherence Letter to ISDA by 5:00 p.m. New York Time on Friday January 30, 2009, or it will not be able to participate in the ISDA 2009 European Loan CDS Protocol.

How do I send in my Adherence Letter?
All Adherence Letters must be delivered by email to lcdsprotocol@isda.org. In the email, you must submit both your conformed and manually executed copies of the Adherence Letter.
The Adherence Letter(s) should be on your institution’s letterhead. Nothing in the form Adherence Letter available on ISDA's website may be changed with the exception of (i) completing the details of the date, your institutional name, DTCC account number, contact details and signature block and (ii) checking the relevant boxes to confirm adherence to the changes in Schedule 1 and/or Schedule 2. You are not required to send your original Adherence Letter(s) by mail to ISDA.

What is a conformed copy?
A conformed copy of the Adherence Letter means that the name of the authorised signatory (for example, Patricia Smith) is typed rather than having Patricia Smith’s actual signature on the letter. ISDA only posts on its website the conformed copy of all Adherence Letters.
You must also submit an executed, or signed, copy of the Adherence Letter in addition to the conformed copy of the Adherence Letter. ISDA keeps the executed copy of the Adherence Letter for its files and does not share the executed copy with anyone else.

Who is an authorised signatory?
An authorised signatory to the Adherence Letter is an individual who has the legal authority to bind the adhering institution.

What if I am an investment or asset manager – how do I complete the signature block?
If you are an investment or asset manager and act on behalf of multiple funds that have entered into covered transactions under the ISDA European Loan CDS Protocol, you may adhere on behalf of all of those funds by indicating the following in the signature block: “Investment/Asset Manager, acting on behalf of each of the funds and accounts listed in the relevant Master Agreement (or other agreement which deems a Master Agreement to have been created) between it and another Adhering Party”(or such other language that indicates the funds to which the Adherence Letter is applicable).  Click here for example. A separate Adherence Letter for each fund or account does not need to be submitted to ISDA. Further, no specific names of clients of the investment/asset manager will be publicly disclosed on the ISDA website in connection with the Protocol.

As an alternative, an investment or asset manager may list the specific funds that are adhering to the Protocol, by indicating in the signature block: “Investment/Asset Manager, acting on behalf of the funds and accounts listed below”. Click here for example. Please note that in this case the names of those funds will be publicly disclosed on the ISDA website.

Can I change the text of the Adherence Letter?
No. The Adherence Letter must be in the same format as the form letter published in the ISDA 2009 European Loan CDS Protocol. You may obtain a copy of the form Adherence Letter by visiting the ISDA website, www.isda.org and clicking on "ISDA 2009 European Loan CDS Protocol" and then clicking on "Form of Adherence Letter".

Limited Right of Revocation
Can I revoke my participation in ISDA 2009 European Loan CDS Protocol?
No.

Cost
Does it cost any money to adhere to the ISDA 2009 European Loan CDS Protocol?
No.

Contents of the Protocol
Why are there two boxes in the Adherence Letter?
The protocol facilitates two sets of amendments. The first is designed to upgrade all LevX and single name transactions on the relevant Standard Terms Supplement published by ISDA on 30 July, 2007 or 12 March, 2008 to the corresponding LevX or single‑name Standard Terms Supplement published by ISDA on 3 October, 2008 The second set of amendments is designed to amend all LevX Series 1 and single-name transactions documented on the original (pre-July 2007, Cancellable) form such that if (and only to the extent that) such documentation references the relevant Sanitec and/or British Vita Deliverable Obligations, the Settlement Method will  be amended to provide, with respect to the Sanitec and British Vita auctions only, for cash settlement by reference to the Final Price determined under the relevant auction.  Therefore, if you wish only to update legacy trades previously documented on the July 2007 or March 2008 ISDA forms, you should tick only the box to adhere to "Schedule 1 - Covered Legacy Transactions". If you wish only to update Sanitec and/or British Vita Transactions documented on the LevX Series 1 Cancellable or single-name Cancellable documentation, you should tick the box to adhere to "Schedule 2 – Covered Sanitec/British Vita Transactions". If you wish to do both of the above, please tick both boxes. Note that if no boxes are ticked, you will be deemed to have ticked both boxes. Note also that as the Schedule 1 amendments only apply to the Standard Terms Supplements published by ISDA in July 2007 and March 2008, and not to the earlier Cancellable documents, you do need to tick both boxes (or neither) if you wish to make both sets of amendments.

What are the key changes from the March 2008 version to the October 2008 version?
The main change is that the Settlement Method has been amended to provide for cash settlement by reference to the Final Price determined in the relevant auction in the case where an auction that covers the relevant Reference Obligations is announced before the NOPS Date.
In addition, the following changes have also been made:

  • Business Days have been amended such that if the Notional Amount is denominated in USD, the Business Days will be London and New York (rather than London and TARGET as in the March 2008 version).
  • Fixed Rate Payer Payment Days have been amended such that if the first Fixed Rate Payer Payment Date would otherwise fall 29 calendar days or less after the Trade Date, the first Fixed Rate Payer Payment Date will instead be the 20th calendar day in the third calendar month following the calendar month in which the first Fixed Rate Payer Payment Date would otherwise have occurred.
  • The Fixed Rate Day Count Fraction used to be Actual/365 if the Notional Amount was denominated in Pounds Sterling. It is now Actual/360 in all cases.
  • It has been clarified that Section 3.9 of the Credit Derivatives Definitions will not apply.