ISDA’s CEO Applauds OTC Derivatives Efforts; Testifies before NYS Assembly Committee

In his continuous effort to educate the financial markets about credit default swaps (CDS), ISDA CEO Robert Pickel testified once again before the US House of Representatives Committee on Agriculture on December 8 to applaud the strength that the OTC derivatives industry infrastructure has demonstrated during the recent financial markets turmoil. Mr Pickel also gave a testimony to the New York State Assembly Standing Committee on Insurance on December 5 where he addressed the importance of the CDS market to the state’s and the nation’s economy.

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EU Central Counterparty

ISDA continues to play a leading role in the coordination of discussions between the CDS industry and the European Commission regarding central clearing of credit derivatives in Europe.

The Commission asked for formal industry commitments by year-end 2008 on this subject, insisting that any such venture be based in Europe, to the extent that it addresses ‘European business’. The Commission has cited “regulatory, supervisory and monetary” considerations to justify this demand.

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LCDS Credit Events

The LCDS auction rules, published by ISDA and CDS IndexCo in May 2007, were put into practice twice in December in regards to Masonite International Corporation and Hawaiian Telcom Communications, Inc. These rules contain the mechanism for putting in place a CDS auction for North American loan-only CDS transactions, including single-name LCDS, untranched and tranche transactions on the LCDX index. Masonite and Hawaiian Telcom are both constituents of the Markit LCDX index.

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