ISDA is pleased to present the proposed Charter for the Credit Derivatives Governance Committee and accompanying DC Rule changes to implement. Pursuant to the announcement made in 2024, an ISDA working group formed from ISDA’s Credit Steering Committee has worked on producing the Governance Committee solution. ISDA views the Governance Committee as the first step in implementing the other recommended changes from the Linklaters’ report as part of an independent review on the composition, functioning, governance and membership of the DCs. ISDA was mandated to move forward with eight overall proposals that were supported by the public consultation held in the summer of 2024, which can be found here.
The proposal establishes a Governance Committee as an industry-wide, global governance body that provides governance and ensures long-term viability of the process by which uniform determinations and settlement for CDS are made and separating the role of making CDS determinations (such as Credit Events and Successors) from the role of determining the rules governing the structure and operational process for making those determinations. Having a single, industry-wide determination on whether a credit event has occurred is critical to enable the clearing of CDS transactions, so having a DC process that is strong, robust and transparent is essential to the safe and efficient functioning of this market.
The Governance Committee will be comprised of up to 20, with a minimum of 15, business-focused, decision-making leaders that represent a broad range of CDS market participants (up to 10 sell-side, 5 buy-side, 3 CCP/index provider members, and 2 additional infrastructure providers). The Governance Committee will be restricted from making DC Rule changes that could impact live Credit Events, therefore the DC Rules in effect when a question is accepted by the DC would continue to apply to determination of that question. DC Rule changes would be made by an 80% supermajority vote after it has been sent out for a public market consultation to incorporate feedback from market participants.
A webinar explaining the Governance Committee can be found here.
ISDA would appreciate any feedback on the proposed solution by June 6th. Please email any feedback to Fred Quenzer, Senior Counsel, America, at fquenzer@isda.org.
Latest
Episode 56: Countdown to Treasury Clearing
With less than nine months to go until the first US Treasury clearing mandates come into force, BlackRock’s Tyler Wellensiek and BNY’s Nate Wuerffel discuss industry progress. Please view this page via Chrome to access the recording.
Response to Eurosystem Consultation on Appia
On April 22, ISDA responded to the Eurosystem consultation on the Appia roadmap. ISDA broadly supports the roadmap and its high level principles, while recommending that the principle on market access and integration should be expanded to explicitly address interoperability...
ISDA Responds to ESMA on PTRR Clearing Exemption
On April 20, ISDA submitted a response to the European Securities and Markets Authority (ESMA) consultation paper on a draft regulatory technical standard (RTS) for the post-trade risk reduction (PTRR) exemption from the derivatives clearing obligation under Article 4b of the...
Response on Competitiveness of EU Banking Sector
On April 17, ISDA responded to the European Commission’s (EC) targeted consultation on the competitiveness of the EU banking sector. The EU is aiming to bolster the ability of its financial markets and banking sector to grow, remain competitive and...