ISDA has published a new interactive digital framework that market participants can use to help prepare for potential terminations of collateralized derivatives contracts.
Launch of the ISDA Close-out Framework is in response to the March 2023 failure of Signature Bank and SVB in the US, which highlighted the complexities of potentially terminating over-the-counter derivatives trading relationships following various post-crisis regulatory reforms. Specifically, in-scope entities are now required to post margin for non-cleared derivatives transactions, while various jurisdictions have introduced mandatory stays on termination rights and remedies as part of bank resolution regimes.
The ISDA Close-out Framework is intended to be used as a preparatory resource to help firms coordinate internal business functions and stakeholders and internal and external legal, operational, risk management, infrastructure and other relevant service providers to ensure they are adequately prepared for any potential future stress events.
The framework includes high-level analysis of the default mechanics and collateral enforcement provisions in ISDA documentation, along with additional commentary on bank resolution legislation in the US and Europe.
“Recent stress events have drummed home that terminating a portfolio of derivatives trades is now much more complex as a result of regulatory reforms. The introduction of mandatory margining and segregation requirements, alongside the implementation of bank resolution regimes, means firms need to be able to quickly respond to complex legal and operational issues that will require input from different teams across the organization. The ISDA Close-out Framework provides an essential interactive tool that firms can use to prepare ahead of any potential stress event,” said Katherine Tew Darras, ISDA’s General Counsel.
The ISDA Close-out Framework is available here: https://close-out.isda.org/#/.
Further information on the ISDA Close-out Framework is available here: https://assets.isda.org/media/5e46315f/06731822.pdf
For Press Queries, Please Contact:
Nick Sawyer, ISDA London, +44 20 3808 9740, nsawyer@isda.org
Joel Clark, ISDA London, +44 20 3808 9760, jclark@isda.org
Christopher Faimali, ISDA London, +44 20 3808 9736, cfaimali@isda.org
Nikki Lu, ISDA Hong Kong, +852 2200 5901, nlu@isda.org
Documents (1) for ISDA Publishes Framework to Prepare for Close Out of Derivatives Contracts
Latest
SwapsInfo Full Year 2025 and Q4 2025
Trading activity in interest rate derivatives (IRD) and credit derivatives increased in 2025, reflecting shifting monetary policy expectations and broader market conditions. IRD traded notional rose by about 46% year-on-year, led by an increase in overnight index swaps (OIS). Index...
ISDA ALF: Katherine Tew Darras Opening Remarks
ISDA Annual Legal Forum London, February 11, 2026 Opening Remarks Katherine Tew Darras ISDA General Counsel Good morning and welcome to ISDA’s Annual Legal Forum. Thank you for joining us today and thanks to our platinum sponsors – Cleary...
Maintaining Focus on Basel III Endgame Recalibration
In its original form, the US Basel III endgame proposal would have resulted in disproportionate increases in capital for trading book activities, forcing banks to make difficult choices about their participation in certain businesses. After two-and-a-half years, a revised proposal...
IRRBB Management in EMDEs
Interest rate risk in the banking book (IRRBB) has become a growing priority for banks and regulators in emerging market and developing economies (EMDEs). As many of these countries face monetary tightening cycles and ongoing macroeconomic volatility, bank balance sheets...