FOR IMMEDIATE RELEASE Tuesday, October 25, 2005
For More Information, Please Contact:
Scott Marra, ISDA New York, 212-901-6000, smarra@isda.org
Over 700 Firms Adhere to ISDA Novation Protocol
NEW YORK, Tuesday, October 25, 2005 – The International Swaps and Derivatives Association, Inc. (ISDA) today announced that over 700 adherents have signed up to ISDA’s Novation Protocol, a solution which facilitates the transfer of an existing trade to a third party. Originally set to close October 31, ISDA has extended the adherence period until November 30, 2005, to enable additional market participants to take part in the protocol. A list of adherents is available at www.isda.org.
The protocol addresses directly the potential for backlogs and uncertainty associated with the transfer of a party’s position in a privately negotiated derivatives transaction. Under the existing terms of the ISDA Master Agreement, the prior written consent of the remaining party is required when its counterparty in a trade wishes to ‘novate’ or ‘assign’ (i.e.: transfer) its position in a trade to a third party. The protocol enables the parties to modify this requirement to a more definitive, simpler and more streamlined exchange of electronic communications among the parties involved.
One of many ISDA initiatives geared toward increasing operational efficiency and legal certainty in the industry, the protocol will apply to credit and interest rate derivatives in its first iteration, with a view to extending to other derivatives product areas in future iterations.
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 670 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.
®ISDA is a registered trademark of the International Swaps
& Derivatives Association, Inc.