ISDA®

INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION

NEWS RELEASE

For Immediate Release Wednesday, July 10, 2002

For More Information, Please Contact:

Stacy Carey, ISDA New York, (212) 901-6011; (917) 543-9622 (cell phone); scarey@isda.org

ISDA to Testify before U.S. Senate AGRICULTURE COMMITTEE:

ADDITIONAL REGULATION OF OTC DERIVATIVES UNWARRANTED

WASHINGTON, D.C., Wednesday, July 10, 2002 – In testimony scheduled to be given before the U.S. Senate Committee on Agriculture, Nutrition and Forestry tomorrow, the International Swaps and Derivatives Association (ISDA) reiterates its position that recent events do not justify additional regulation of over-the-counter (OTC) derivatives.

The Committee’s hearing, scheduled for Wednesday morning, July 10^th, will examine the existing regulatory authority of the Commodity Futures Trading Commission (CFTC) over OTC derivatives as well as proposals to amend the Commodity Exchange Act (CEA) to increase the CFTC’s authority over these transactions in order to prevent fraud and market manipulation.

In its testimony, ISDA cautions that proposals to alter the CFMA in light of the Enron debacle would, if implemented, defeat the underlying policy objective of legal certainty for OTC derivatives. ISDA also notes that the legal certainty provisions of the CFMA and the related provisions of the Bankruptcy Code (adopted in 1990) may have enhanced the ability of market participants to deal effectively with events such as the collapse of Enron.

ISDA also asserts that Enron’s failure of corporate governance, in which internal control mechanisms were compromised by conflicts of interest that enriched certain managers at the expense of shareholders, ultimately led to the firm’s demise, not its use of OTC derivatives. The Association further contends that even after Enron failed, the market for swaps and other derivatives worked as expected and experienced no apparent disruption.

In April, ISDA released a report examining the failure of Enron, “Enron: Corporate Failure, Market Success.”

The complete text of ISDA’s testimony will be available tomorrow at 10:00 am at www.isda.org.

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 575 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

^®ISDA is a registered trademark of the International Swaps & Derivatives Association, Inc.

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