For Immediate Release Thursday, May 26, 2005
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ISDA PUBLISHES CREDIT DEFAULT SWAP INDEX PROTOCOL
NEW YORK, Thursday, May 26, 2005 – The
International Swaps and Derivatives Association (ISDA) today announced its
publication of a protocol created to facilitate settlement of credit derivative
trades involving Collins & Aikman Products Co.
Collins & Aikman, a U.S. company that filed for
bankruptcy on May 17, 2005, is an auto parts supplier included in various
credit derivative indices published by Dow Jones CDX and TRAC-X.
The
2005 CDS Index
Protocol offers market participants an efficient way to settle trades on
credit derivative indices that include Collins & Aikman.
The Protocol enables institutions to amend their documentation for such index
trades from physical to cash settlement and to participate in an auction,
scheduled for June 14, 2005, which will determine the final price for a Collins
& Aikman bond maturing on December 31, 2011. Markit Partners and Creditex will
administer the auction.
“This is a new approach to
an issue that can arise when a credit event, such as bankruptcy, triggers the
need to settle a large number of derivatives transactions on a finite supply of
securities,” said
With the 2005 CDS Index
Protocol, ISDA enables parties to amend credit derivative index documents on a
multilateral basis rather than through one-on-one negotiations between all
counterparties. In addition to greater
efficiency, time and cost savings, using the Protocol will provide enhanced
legal certainty.
The Protocol is open to
ISDA members and non-members alike. The
adherence period for the Protocol is May 26 to June 3, 2005. The text of the
Protocol and form of adherence letter, guidance on the mechanics of the Protocol,
answers to frequently asked questions and details on adherents, are all
available at www.isda.org. Details on
the auction are included in the Protocol.
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 625 member institutions from 47 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.