ISDA actively works on and addresses various legal and regulatory matters in respect of bank recovery and resolution regulation and implementation solutions. ISDA is also an active participant in discussions with regulators and legislators regarding bank recovery and resolution issues.
Please find our responses, comment letters, press releases and publications pertaining to regulatory developments here.
The ISDA Bank Recovery and Resolution Summary and FAQ is a resource which sets out the key impacts on derivatives under the BRRD and addresses frequently asked questions on the BRRD and related ISDA documentation initiatives, including protocols.
The ISDA Bank Resolution Stay Matrix sets out information on several key developments in a variety of jurisdictions related to the resolution of financial institutions and includes links to relevant legislation and related ISDA documentation initiatives, including protocols.
Protocols – Contractual Recognition
ISDA has developed numerous documentation and technology solutions to facilitate compliance with regulatory requirements with respect to bank recovery and resolution.
ISDA Bail-in Art 55 BRRD Protocols: Article 55 of the EU Bank Recovery and Resolution Directive (BRRD) requires in-scope entities to include a contractual term in agreements creating any relevant liability governed by a third country law whereby the creditor recognises that the liability may be subject to the exercise of write-down and conversion powers (bail-in) under the BRRD and agrees to be bound by any such bail-in, provided that such liability is not an excluded liability. ISDA produced two protocols to assist market participants with Article 55 compliance.
ISDA 2016 Bail-in Art 55 BRRD Protocol (Dutch/French/German/Irish/Italian/Luxembourg/Spanish/UK entity-in-resolution version)(“ISDA 2016 Bail-in Protocol”) – The ISDA 2016 Bail-in Protocol assists in-scope Dutch, French, German, Irish, Luxembourg, Spanish and UK entities to amend relevant agreements to reflect the requirements of Article 55 of the BRRD as implemented in the relevant jurisdiction. The ISDA 2016 Bail-in Protocol and related information can be accessed here.
ISDA 2017(Austrian/Belgian/Danish/Swedish entity-in-resolution version) (“ISDA 2017 Bail-in Protocol”) – The ISDA 2017 Bail-in Protocol assists in-scope Austrian, Belgian, Danish, Swedish entities to amend relevant agreements to reflect the requirements of Article 55 of the BRRD as implemented in the relevant jurisdiction.The ISDA 2017 Bail-in Protocol and related information can be accessed here.
ISDA 2015 Universal Resolution Stay Protocol (ISDA Universal Protocol): The ISDA Universal Protocol was developed by a working group of ISDA members, in coordination with the Financial Stability Board. It is a major component of the initiative to address “too big to fail” institutions. It allows parties to amend terms of Protocol Covered Agreements to contractually recognize cross-border application of special resolution regimes until comprehensive statutory regimes are adopted and to support the resolution of certain financial companies under the United States Bankruptcy Code.
The ISDA Universal Protocol and related information can be accessed here.
ISDA Resolution Stay Jurisdictional Modular Protocol (ISDA JMP): The ISDA JMP enables parties to amend the terms of Protocol Covered Agreements to aid compliance with certain regulatory requirements in various jurisdictions which, in general, require entities subject to those regulatory requirements to obtain from their counterparties a contractual recognition of the application of stays on or overrides of certain termination rights under the home-country special resolution regime of such regulated entity. Parties may choose to adhere to one or more Jurisdictional Modules to the ISDA JMP. ISDA as published Jurisdictional Modules for the UK (PRA Rule) and Germany.
The ISDA JMP and related information can be accessed here.
ISDA & IHS Markit Solutions
ISDA Amend 2.0, in conjunction with the ISDA JMP, allows users to make certain elections related to specific Jurisdictional Modules, and inform counterparties of relevant adherence information. Further information is available here (opens ISDA Amend site in separate window).
As part of the annual update process for the legal opinions on the enforceability of the netting and collateral provisions of ISDA documentation which ISDA commissions on behalf of its members, ISDA expects local counsel to outline the key features of bank resolution in the relevant jurisdiction from a derivatives perspective. Please find the published legal opinions available to ISDA members here.