For
Immediate Release Wednesday, November 22, 2006
For More Information, Please
Contact:
ISDA Applauds
and Supports Industry Commitment to Improve
Equity Derivatives Infrastructure
NEW YORK, Wednesday, November
22, 2006 – The International Swaps and
Derivatives Association (ISDA) applauds the commitment by a group of 17
major market participants to improve the infrastructure surrounding equity
derivatives transactions, as outlined in a letter to the Federal Reserve Bank
of New York yesterday.
"ISDA is pleased and proud to have assisted market
participants in making the real changes to business processes that led to major
reductions in credit derivatives confirmations work-in-hand over the past year,
and continues to support the group in its new commitment to addressing equity
derivatives confirmations," said
ISDA's efforts in this respect are
focused on promoting and facilitating standardization of documentation and
business processes as well as increased use of automation in the equity
derivatives space and across asset classes. Equity derivatives represent the
most regionally and product-diverse sector of the derivatives industry. ISDA,
with the support of its membership, is implementing an aggressive schedule of
further enhancements to its extensive market-standard documentation architecture
by continued work on a range of regional and product-specific equity
derivatives enhancements, including the addition of variance swap documentation
for Europe,
Increased product automation in this
and other areas are supported by ISDA's sponsorship of Financial products
Mark-up Language (FpML), the freely available business information exchange standard for electronic dealing
and processing of privately negotiated derivatives and structured products.
The industry’s strong progress in improving credit derivatives
processing was significantly assisted by an extensive range of ISDA initiatives
in operations and documentation. Earlier this year the industry announced a
dramatic reduction in backlogs of outstanding confirmations by over 80% on
average since September 30, 2005. The 2005 ISDA Novation Protocol played a key
role in effecting this reduction and continues to prove its effectiveness in
having removed a major potential source of outstanding confirmations. Along
with a series of ad hoc protocols to facilitate cash settlement of credit derivatives,
this continues ISDA’s important work across the full range of asset classes to
streamline operational efficiencies that began with the publication of its
Operations Strategic Plan in December 2003, closely followed by its Operations
Implementation Plan in March 2004.
The letter submitted by the group of 17 market participants is
available at the Federal Reserve Bank of
About ISDA
ISDA, which represents participants in the privately negotiated derivatives industry, is the largest global financial trade association, by number of member firms. ISDA was chartered in 1985, and today has over 725 member institutions from 50 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.
About FpML
FpML (Financial products Markup Language) is the freely licensed business information exchange standard for electronic dealing and processing of privately negotiated derivatives and structured products. It establishes the industry protocol for sharing information on, and dealing in, financial derivatives and structured products over the Internet. It is based on XML (Extensible Markup Language), the standard meta-language for describing data shared between applications. The standard is developed under the auspices of ISDA, using the ISDA derivatives documentation as the basis.