The 2009 ISDA Credit Derivatives Determinations Committees and Auction Settlement CDS Protocol (or ‘Big Bang’ Protocol) represents the final step in the process known as “hardwiring”, or the incorporation of auction settlement terms into standard CDS documentation.
This is implemented by way of a supplement to the 2003 ISDA Credit Derivatives Definitions. The Auction Supplement amends the ISDA CDS Definitions to incorporate the CDS settlement auction terms that have to date been included in the auction protocols. It also includes provision for the ISDA Determinations Committee, which going forward will make binding determinations for issues such as whether a Credit Event has occurred; whether an auction will be held; and whether a particular obligation is deliverable.
The amendments made by the Auction Supplement apply to transactions entered into going forward. ISDA has also published a Protocol to facilitate the amendment of existing transactions to reflect the new terms.
Full details on the Big Bang Protocol, including FAQs, supplemental materials, and a list of adhering parties, can be found here.