ISDA is pleased to present the proposed Lock-Up Agreements and CDS – Proposed Auction Solution. “Lock-Up Agreements” are market-wide arrangements, broadly standardized and predominantly integrated with court sanctioned restructuring or bankruptcy processes. Numerous end users will sign material Lock-Up Agreements prior to the default or restructuring of a Reference Entity. However, the amount of debt that is covered by Lock-Up Agreements can have a disproportionate impact on CDS settlement due to squeezes, perceived squeezes and the interplay of artificial and arbitrary factors such as auction timing and imprecise lock-up data.
The CDS industry represented by ISDA’s Credit Steering Committee (CSC), aims to have a consistent and uniform approach in relation to Locked Up Debt and CDS Auctions that addresses the relevant issues. We note that this proposal is a framework and ISDA is seeking market feedback on the proposal. Additional detail will be developed if there is support for the proposal to ensure the proposal works operationally with respect to the Auctions.
ISDA would appreciate any feedback on the proposed solution by August 8th. Please email any feedback to Fred Quenzer, Senior Counsel, America, at fquenzer@isda.org.
Documents (1) for Credit Derivatives Proposal to Address Lock-Up Agreements for CDS Auctions
Latest
Response to JSCC on Clearing Fund Consolidation
On August 12, ISDA responded to the Japan Securities Clearing Corporation’s (JSCC) consultation on its proposal to consolidate clearing fund consumption, calculation and deposit segmentation across six clearing qualifications under the Financial Instruments and Exchange Act. ISDA members broadly support...
Response on CSDD Guidelines
On August 6, ISDA responded to the European Commission’s (EC) consultation on due diligence guidelines under the Corporate Sustainability Due Diligence Directive (CSDDD). While ISDA acknowledges that model contractual clauses can be a helpful resource for in-scope companies, there are...
Response to BoE on Extension of Settlement Hours
On August 6, ISDA responded to the Bank of England’s (BoE) consultation paper on the extension of settlement hours for RTGS and CHAPS, the UK’s high-value payment system. ISDA supports the BoE’s plan to extend RTGS and CHAPS settlement hours...
SwapsInfo H1 2026 & Q2 2026 Review
Trading activity in interest rate derivatives (IRD) and credit derivatives increased in the first half of 2026 compared with the same period in 2025. Growth in IRD was driven by overnight index swaps (OIS), while higher index credit derivatives activity...