OTC Derivatives Collateral Process—Best Practices

NEW YORK, Wednesday, June 30, 2010—The International Swaps and Derivatives Association, Inc. (ISDA) today published Best Practices for the OTC Derivatives Collateral Process (“Best Practices”). The Best Practices are the result of the collaborative efforts of a working group of buy-side and sell-side market participants, under the auspices of the ISDA Collateral Steering Committee. The detailed document, which will be updated by the Collateral Steering Committee on a periodic basis, provides guidance on current best practices for the collateral management process.

“ISDA continues to harmonize practices between market participants in an effort to mitigate risks, set expectations and establish further market standards,” said Julian Day, Head of Trading Infrastructure, ISDA. “The Best Practices for Collateral are the latest in a series of industry efforts by collateral professionals to enhance the collateral management practice.”

The Best Practices focuses on OTC derivative trades collateralized on a bi-lateral basis under the ISDA English and New York law Credit Support Annexes (CSAs) and English Law Credit Support Deed (CSD) agreed between two parties.

The pro-active focus on industry improvement is based on continuing industry engagement and collaboration to establish a set of best of breed practices. Since the publication of the first Guidelines for Collateral Practitioners by ISDA’s Collateral Committee in 1998, professionals have sought to improve the collateral process. Recent contributions by the industry, which are referenced in the Best Practices, include the 2009 Recommended Practices for Collateralized Portfolio Reconciliation, Standards for the Electronic Exchange of OTC Derivative Margin Calls, the 2010 Market Review of Bilateral Collateralization Practices and the Independent Amount Whitepaper.

 

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 over 820 member institutions from 57 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.

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