For Immediate Release March 25, 2003
For More Information, Please Contact:
ISDA BEST PRACTICES STATEMENT
FOR CERTAIN ENERGY PRODUCTS
Platt’s European Marketscan (“Platt’s”) will implement
several product methodology changes, effective Tuesday, April 1, 2003. In particular, Platt’s will reflect “market on
close” assessments in the determination of prices for all European oil
products. The market on close assessment
will reflect the market price at 17:30
ISDA is issuing this statement in light of prevailing market conditions and in the interest of mitigating market risk and promoting orderly valuation and settlement of positions by participants in the energy market While parties are not obliged to follow these rules, and may choose alternate means of addressing an event, ISDA strongly encourages market participants to follow theseguidelines.
discussions with a broad group of energy market regarding Platt’s change in the assessment of prices for European oil products ISDA issues the following statement of best practices for all parties to any physical and derivative transaction involving the pricing of European oil products on or after, April 1, 2003whether documented under ISDA Master Agreements or under other contractual arrangements.
ISDA, in consultation with energy market participants, recommends the following methodology for all physical and derivative transactions affected by Platt’s change in product methodology effective April 1, 2003:
1. For any physical and derivative transaction where the pricing of that transaction in whole or part is referenced to the quotation appearing in Platt’s “European Marketscan” as the “IPE Gasoil Average” (being the daily weighted average of the International Petroleum Exchange’s first nearby Gasoil futures contracts), such pricing of that transaction shall be referenced to the daily settlement price of the International Petroleum Exchange’s first nearby Gasoil futures contract, as published by the International Petroleum Exchange’s first nearby Gasoil futures contract, as published by the International Petroleum Exchange.
2. Except as provided in 1. above, for any physical and derivative transaction where the pricing of that transaction in whole or part is referenced to a quotation appearing in Platt’s “European Marketscan” for European oil product(s), such pricing of that transaction shall continue to be made by reference to that Platt’s quotation notwithstanding Platt’s change in product methodology.
ISDA is the global trade association representing leading participants in the privately negotiated derivatives industry. ISDA was chartered in 1985, and today has more than 600 member institutions from 46 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities. Information about ISDA and its activities is available on the Association's web site: www.isda.org.
 Such recommendation reflects the
current practice of the International Petroleum Exchange to assess the
settlement price at 17:27
 This position is reflective of the timescale imposed for the introduction of the Platt’s change in methodology and may be subject to further review and recommendation.