ISDA®
INTERNATIONAL
SWAPS AND DERIVATIVES ASSOCIATION, INC.
NEWS RELEASE
For Immediate Release, Tuesday, September 16,
2008
For More Information, Please Contact:
Louise Marshall, ISDA New York, 212-901-6014, lmarshall@isda.org
Cesaltine Gregorio, ISDA New York, 212 901 6019, cgregorio@isda.org
ISDA ANNOUNCES FURTHER STEP TOWARD COMPLETION OF
FANNIE MAE AND FREDDIE MAC PROTOCOL
After consulting with a broad section of its membership as to the deliverability
of the principal-only component of debt securities of the two GSEs, ISDA
consulted its Board of Directors to bring the debate to resolution. The ISDA
Board, with the benefit of advice from Allen & Overy LLP that any component
of a debt security is not a deliverable obligation under a standard CDS
contract, determined that principal-only components will not be included in the
list of deliverable obligations for purposes of the settlement auctions in
respect of the GSEs.
Following its initial discussions with a range of representatives, ISDA took
the step of referring this decision to its Board of Directors, with input from
counsel, in order to provide certainty to the market and to reflect the terms,
spirit and intent of the contract, and facilitate the most fair and appropriate
economic determination.
"The result reflects the optimal outcome for the legal integrity of the
contract and is the right outcome for the reasonable economic expectations of
market participants," said Robert Pickel, Executive Director and Chief
Executive Officer, ISDA. "This is another example of how ISDA, working
with market participants from the full range of constituencies,
has achieved a fair and reasonable resolution that benefits the integrity of
the product and of the industry itself."
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.