Frequently Asked Questions

ISDA has prepared this brief summary of frequently asked questions to assist in your consideration of the Second ISDA Japan Calculation Agent City Protocol (the "Second Protocol").

THIS FREQUENTLY ASKED QUESTIONS DOES NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE SECOND PROTOCOL. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE SECOND PROTOCOL. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT.

Adherence Letter Submission Process
When do I need to send in my Adherence Letter?
The Second Protocol will be open from 2 March 2010 and will close at 5pm NY time on 17 March 2010.

How do I send in my Adherence Letter?
All Adherence Letters must be delivered by email to japancacprotocol@isda.org. In the email, you must submit both your conformed and executed copies of the Adherence Letter.

The Adherence Letter(s) should be on your institution’s letterhead. Nothing in the form Adherence Letter available on ISDA's website may be changed with the exception of completing the details of your institutional name, date and signature block.
You are not required to send your original Adherence Letter(s) by mail to ISDA.

What is a conformed copy?
A conformed copy of the Adherence Letter means that the name of the authorized signatory (for example, Patricia Smith) is typed rather than having Patricia Smith’s actual signature on the letter. ISDA only posts on its website the conformed copy of all Adherence Letters.

You must also submit an executed, or signed, copy of the Adherence Letter in addition to the conformed copy of the Adherence Letter. ISDA keeps the executed copy of the Adherence Letter for its files and does not share the executed copy with anyone else.

Who is an authorized signatory?
An authorized signatory to the Adherence Letter is an individual who has the legal authority to bind the adhering institution.

What if I am an investment or asset manager – how do I complete the signature block?
If you are an investment or asset manager and act on behalf of multiple funds, you must indicate the following in the signature block: "Investment/Asset Manager, acting on behalf of the funds and accounts listed in the relevant Governing Master Agreement between it and another Adhering Party". A separate Adherence Letter for each fund or account does not need to be submitted to ISDA. Further, no specific names of clients of the investment/asset manager will be publicly disclosed on the ISDA website in connection with the Second Protocol.

As an alternative, an investment or asset manager may list the specific funds that are adhering to the Second Protocol, by indicating in the signature block: “Investment/Asset Manager, acting on behalf of the funds and accounts listed in the attachment to this Adherence Letter”.  Please note that in this case the names of those funds will be publicly disclosed on the ISDA website.

Can I change the text of the Adherence Letter?
No. The Adherence Letter must be in the same format as the form letter published in the Second  Protocol. You may obtain a copy of the form Adherence Letter by visiting the ISDA website, www.isda.org and clicking on "Second ISDA Japan Calculation Agent City Protocol " and then clicking on "Form of Adherence Letter".

Does it cost any money to adhere to the Second Protocol?
No.
Details relating to the Second Protocol

What does the Second Protocol do?

The goal of the Second Protocol is to change, in respect of transactions that are covered by the Second Protocol, the Calculation Agent City to Tokyo with respect to any Reference Entity that the Confirmation identifies or has the effect of identifying "Japan Corporate" or "Japan Sovereign" as the relevant "Transaction Type" as of the relevant date of making a determination in respect of such Reference Entity, e.g. whether an Event Determination Date has occurred with respect to a Credit Event relating to such Reference Entity.  

What transactions are covered by the Second Protocol?

Only single name Credit Derivative Transactions with a Confirmation that identifies or has the effect of identifying "Japan Corporate" as the relevant Transaction Type with respect to the Reference Entity ("Single Name Japan Corporate Credit Derivative Transactions") are covered by the ISDA Japan Corporate Calculation Agent City Protocol dated 12 January 2010 (the "Original Protocol").  The Second Protocol expands the scope of coverage to include any Credit Derivative Transactions that is either a Covered Index Transaction (including CDX and iTraxx Tranched and Untranched), a Covered Swaption Transaction (single name and portfolio), a Covered Non-Swaption Transaction (e.g. Single name, Nth to default, Recovery Lock, Bespoke Portfolio Transactions) or a Covered Non-Auction Transaction (transaction types that are not typically included in CDS auctions, e.g. Reference Obligation only, Fixed Recovery, Preferred CDS or Party Specified Non-Auction Transactions); in each case with a Confirmation that identifies or has the effect of identifying "Japan Corporate" or "Japan Sovereign" as the relevant "Transaction Type" with respect to a Reference Entity as of the relevant date of determination in respect of such Reference Entity.  The Second Protocol therefore covers Credit Derivative Transactions that are bespoke portfolio transactions and index transactions (including CDX and Itraxx Tranched and Untranched). 

The Second Protocol does not cover Credit Derivative Transactions that are associated with a credit linked note; Loan Only Transactions; U.S. Muni Transactions; CDS on ABS Transactions and Excluded Index Transactions.

If I signed up to the Original Protocol, do I still need to sign up to the Second Protocol?

Parties that signed up to the Original Protocol are NOT automatically adhered to the Second Protocol.  A party that adhered to the Original Protocol and now wishes to make the changes discussed above would therefore need to adhere to the Second Protocol. 

If you and another party have both adhered to the Original Protocol, then the amendments made there in respect of the Single Name Japan Corporate Credit Derivative Transaction covered in the Original Protocol will be effective as of the implementation date for that Original Protocol between the two of you.  If both of you subsequently enter into the Second Protocol, the Second Protocol will then override and replace the Original Protocol and the amendments made by the Second Protocol will be effective as of the implementation date for the Second Protocol.

If you are an adhering party to the Original Protocol but not to the Second Protocol, you will remain bound by the amendments made in the Original Protocol as from the implementation date of the Original Protocol.