ISDA®
INTERNATIONAL
SWAPS AND DERIVATIVES ASSOCIATION, INC
NEWS RELEASE
For Immediate Release, Thursday, July 31, 2008
For More Information, Please Contact:
Cesaltine Gregorio, ISDA New York, 212-901-6019, cgregorio@isda.org
ISDA INITIATIVES TO BE KEY PART OF INDUSTRY EFFORTS TO IMPROVE OPERATIONAL INFRASTRUCTURE
NEW YORK, Thursday, July 31, 2008: The International Swaps and Derivatives Association, Inc. (ISDA) jointly signed a letter submitted today by market participants and industry associations to a group of international regulators. The letter highlights some of the significant efforts ISDA is making in connection with the ongoing commitments of market participants to strengthen the operational infrastructure for privately negotiated derivatives.
The ISDA initiatives outlined in the letter include:
· completion of its project to incorporate as the market standard an auction settlement mechanism for credit default swaps
· best practices for collateral management
· efforts to facilitate compression in size and scaleability of credit derivatives portfolios
· integration of buy- and sell-side efforts in respect of enhanced operational efficiency
“These efforts are consistent with ISDA’s primary purpose, to encourage the prudent and efficient development of the privately negotiated derivatives business via the continued standardization of documentation, promotion of sound risk management practices and education of the marketplace,” said Robert Pickel, Executive Director and Chief Executive Officer, ISDA.
One of the initiatives outlined in the letter is ISDA’s efforts to strengthen Credit Event management across the industry with the incorporation of ISDA's off-the-shelf credit derivative settlement auction mechanism into ISDA documentation. ISDA is working with its membership to finalize that incorporation (a process which has been commonly referred to as “hardwiring” the provisions into ISDA documentation).
The Association has worked closely with major dealers to identify and pursue further advances in collateral management, including portfolio-reconciliation best practices. In addition to the best practice guidance published today, ISDA will continue to work on a number of related initiatives intended to further strengthen market mechanisms over the next several months.
The
letter to regulators puts increased focus on ISDA’s project toward compression
of CDS portfolios, an initiative which will minimize the operational burden of
managing the universe of outstanding CDS trades between dealer firms. ISDA is
coordinating ongoing discussions on portfolio compression and has facilitated member
firms’ selection of third party providers for the compression service.
ISDA continues to work closely with the Managed Funds Association (MFA) and the Asset Management Group of the Securities Industry and Financial Markets Association (SIFMA) on outreach to buy-side participants toward greater coordination with the sell-side community in respect of the commitments being made to regulators.
The group last met with the regulatory community at the Federal Reserve Bank of New York on June 9 and submitted a previous letter on March 27, 2008.
About ISDA
ISDA, which represents participants in the privately negotiated derivatives industry, is among the world’s largest global financial trade associations as measured by number of member firms. ISDA was chartered in 1985, and today has approximately 850 member institutions from 56 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.