The French Jurisdictional Module was created to allow market participants to comply with the French Prudential Supervision and Resolution Authority Decision n°2017-CR-09 dated December 18, 2017 and the Governmental Act dated November 22, 2017 amending the Governmental Act dated September 11, 2015 related to the “criteria for the assessment of resolvability” (French Regulation), regarding contractual stays in certain financial contracts that are governed by the law of a third country.

The French Jurisdictional Module to the ISDA Resolution Stay Jurisdictional Modular Protocol enables entities subject to the French Regulation to amend the terms of their Covered Agreements by obtaining from certain counterparties a contractual recognition of the application of stays on termination with respect to requirements of the French Regulation.

Please refer to the “Frequently Asked Questions” below for more information.

The French Jurisdictional Module is open to ISDA members and non-members. Parties will pay a one-time fee of $500 to ISDA for each adherence to the French Jurisdictional Module. There is no cut-off date to the French Jurisdictional Module. ISDA does, however, reserve the right to designate a cut-off date by giving 30 days’ notice on this.

ISDA Resolution Stay Jurisdictional Modular Protocol

French Jurisdictional Module

ISDA has prepared this list of frequently asked questions to assist in your consideration of the FRENCH JURISDICTIONAL MODULE to the ISDA RESOLUTION STAY JURISDICTIONAL MODULAR PROTOCOL (the ISDA Jurisdictional Modular Protocol).

THESE FREQUENTLY ASKED QUESTIONS DO NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE FRENCH JURISDICTIONAL MODULE. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE FRENCH JURISDICTIONAL MODULE.  ALL TRANSLATIONS OF FRENCH WORDS OR PHRASES ARE UNOFFICIAL. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION MAY BE PUT.

These FAQs address the following questions:

  • What is the purpose of the French Jurisdictional Module?
  • How does adherence to the French Jurisdictional Module and the ISDA Jurisdictional Modular Protocol work?
  • How does the French Jurisdictional Module relate to the French Regulation?
  • Why are certain terms in italics and others in quotation marks?
  • What agreements are Covered Agreements under the French Jurisdictional Module?
  • What entities are Regulated Entities under the French Jurisdictional Module?
  • When does the French Jurisdictional Module become effective?
  • What are the compliance dates for the French Regulation?
  • How do I sign up to the French Jurisdictional Module?

The ISDA Jurisdictional Modular Protocol is designed to facilitate market participants’ compliance with regulations regarding contractual stays in financial contracts governed by third-country law in different jurisdictions. As regulations are adopted in a jurisdiction, a “Jurisdictional Module” to the ISDA Jurisdictional Modular Protocol can be published that includes operational provisions based on the text of that regulation and aimed at enabling parties to comply with those requirements. A party can adhere to a particular Jurisdictional Module by submitting an Adherence Letter for such Jurisdictional Module. Each Jurisdictional Module is considered individually. For more information on the ISDA Jurisdictional Modular Protocol and adherence to the ISDA Jurisdictional Modular Protocol, please see the general FAQs for the ISDA Jurisdictional Modular Protocol.

The French Jurisdictional Module was published as a Jurisdictional Module to the ISDA Jurisdictional Modular Protocol on November 19, 2018.

What is the purpose of the French Jurisdictional Module?

The French Jurisdictional Module was created to allow market participants to comply with the French Prudential Supervision and Resolution Authority Decision (ACPR) n°2017-CR-09 dated December 18, 2017 and the Governmental Act dated November 22, 2017 amending the Governmental Act dated September 11, 2015 related to the “criteria for the assessment of resolvability” (French Regulation), regarding contractual stays in certain financial contracts that are governed by the law of a third country. Adhering Parties will be able to adhere to the French Jurisdictional Module and identify themselves as either “Regulated Entities” that are subject to the French Regulation or “Module Adhering Parties” that are adhering for the purpose of satisfying the regulatory requirements applicable to their counterparties under the French Regulation.

How does adherence to the French Jurisdictional Module and the ISDA Jurisdictional Modular Protocol work?

Does a Module Adhering Party have to amend its Covered Agreements with all Regulated Entities?

No, a Module Adhering Party has the ability to choose the Regulated Entity or Regulated Entities it would like to amend its Covered Agreements with when it adheres to the French Jurisdictional Module. Once a Module Adhering Party chooses to amend its agreements with a particular Regulated Entity, that Regulated Entity is defined as a “Regulated Entity Counterparty” with respect to that particular Module Adhering Party and to the French Jurisdictional Module.

Module Adhering Parties have multiple options for how they can choose the Regulated Entity or Regulated Entities they would like to amend their Covered Agreements with.

How can a Module Adhering Party choose which Regulated Entities it will amend its Covered Agreements with?

A Module Adhering Party with respect to the French Jurisdictional Module may choose the Regulated Entity or Regulated Entities it would like to amend its Covered Agreements with by choosing between the following three options in its Adherence Letter:

  1. All Regulated Entities: Under this option, a Module Adhering Party identifies every Adhering Party that has identified itself as a “Regulated Entity” with respect to the French Jurisdictional Module to be a Regulated Entity Counterparty with respect to it. That means that the Module Adhering Party is agreeing to amend all of the relevant Covered Agreements with all of the Regulated Entities that have adhered or will adhere in the future to the French Jurisdictional Module.
  2. All G-SIBs: Under this option, a Module Adhering Party identifies any current or future Regulated Entity with respect to the French Jurisdictional Module that is part of a banking group that has been designated by the Financial Stability Board as a “global systemically important bank” (G-SIB), as of the date of the publication of the French Jurisdictional Module, as a Regulated Entity Counterparty with respect to it. This election would include Regulated Entities within such G-SIB group that subsequently adhere to such Jurisdictional Module but not Regulated Entities that are members of banking groups that are subsequently identified as G-SIBs.
  3. Entity-by-Entity: Under this option, the Module Adhering Party chooses to identify one or more Regulated Entities with respect to the French Jurisdictional Module as Regulated Entity Counterparties with respect to it. The Module Adhering Party can notify each Regulated Entity that it identifies as a Regulated Entity Counterparty, either through ISDA Amend or by sending a bilateral “Module Adherence Notice” directly to such Regulated Entity. Note that a Module Adhering Party that chooses to identify one or more Regulated Entities as Regulated Entity Counterparties with respect to it may choose between Regulated Entities in the same banking group within the French Jurisdictional Module.

Once I submit my Adherence Letter, is my adherence to the French Jurisdictional Module complete or are there any other steps I have to take?

Depending on the elections you make as a Module Adhering Party, you may be required to send notices to Regulated Entity Counterparties after you submit your Adherence Letter to complete your adherence to the French Jurisdictional Module.

Entity-by-Entity Designation

If you adhere as a Module Adhering Party and elect to identify Regulated Entity Counterparties on an “Entity-by-Entity” basis (i.e., option 3 above), you need to take steps to identify Regulated Entity Counterparties. You can do this either (1) through ISDA Amend or (2) by sending a bilateral “Module Adherence Notice” to each Regulated Entity Counterparty. Your contracts will not be amended until the date you notify a Regulated Entity that it is a Regulated Entity Counterparty with respect to you.

If you wish to use ISDA Amend to identify one or more specific Regulated Entities as Regulated Entity Counterparties with respect to you, you may do so by using the ISDA Amend website (http://www.markit.com/product/isda-amend). To use the ISDA Amend website, you will need to have an account with ISDA Amend, log in and complete the steps necessary to make Entity-by-Entity elections.

If you wish to identify one or more specific Regulated Entities as Regulated Entity Counterparties with respect to you by sending such Regulated Entity or Regulated Entities bilateral Module Adherence Notices, rather than through ISDA Amend, such notices must at a minimum (1) identify the Module Adhering Party and the Jurisdictional Module and (2) identify the Regulated Entity as a Regulated Entity Counterparty with respect to the Module Adhering Party. ISDA has published a sample Module Adherence Notice (http://assets.isda.org/media/f253b540-102/3eb0dc21.docx) that Module Adhering Parties can use to make Entity-by-Entity elections.

Adherence as an Agent on Behalf of Clients

If you are an agent adhering on behalf of “some but not all” clients, you must either identify the clients on whose behalf you are adhering in an annex to your Adherence Letter (which will be made public on the ISDA website) or send a list to each Regulated Entity Counterparty with respect to such clients identifying the clients on whose behalf you are adhering.

If you are an agent adhering on behalf of “all” clients that you represent, you may, but are not required to, identify the clients on whose behalf you are adhering, either in an annex to your Adherence Letter (which will be made public on the ISDA website) or by sending a list of the clients on whose behalf you are adhering to each Regulated Entity Counterparty with respect to such clients.

If you wish to use ISDA Amend to notify your Regulated Entity Counterparties of the clients on whose behalf you are adhering, you may do so by using the ISDA Amend website (http://www.markit.com/product/isda-amend). To use the ISDA Amend website, you will need to have an account with ISDA Amend, log in and complete the steps necessary to provide Regulated Entity Counterparties with the lists of clients on whose behalf you are adhering.

If you wish to bilaterally notify your Regulated Entity Counterparties of the clients on whose behalf you are adhering, ISDA has published a sample Underlying Funds Notice (http://assets.isda.org/media/f253b540-103/af6818e9.docx) that agents can use to notify their Regulated Entity Counterparties of the clients on whose behalf they are adhering.

How does the French Jurisdictional Module relate to the French Regulation?

The French Jurisdictional Module is intended to facilitate compliance with the French Regulation. The provisions of the French Jurisdictional Module that amend Covered Agreements are based on the provisions of the French Regulation. Note, however, that as discussed in Question 4 of the general FAQs for the ISDA Jurisdictional Modular Protocol, amendments in a Jurisdictional Module, including the French Jurisdictional Module, are made to Covered Agreements on a “retrospective” and “prospective” basis, even if this is not required by the French Regulation.

Parties should consult with their legal advisers and any other adviser they deem appropriate to understand the requirements of the French Regulation.

Why are certain terms in italics and others in quotation marks?

Words and phrases in quotation marks have the meaning given in the French Regulation to the bracketed and italicized French word or phrase immediately following such word or phrase. The French Jurisdictional Module is interpreted in accordance with the French Regulation.

What agreements are Covered Agreements under the French Jurisdictional Module?

French Regulated Agreements, as defined under the French Jurisdictional Module, are Covered Agreements under the French Jurisdictional Module.

A French Regulated Agreement is, as such terms are defined in the French Regulation, any “financial contract” [contrat financier]:

(a) referred to in Article L. 613-34-1 (12°) (a) to (d) or (f) of the “French Monetary and Financial Code” [Code monétaire et financier];

(b) “governed by the law of a third country” [régis par le droit d’un pays tiers]; and

(c) entered into by:

(i) the “relevant entity” [personne concernée]; or

(ii) any “entity of the same group” [entité du groupe auquel cette personne appartient] and:

(a) that is “bound by cross-default provisions” [liée par une clause de défaut croisé] to the “relevant entity” [personne concernée] or

(b) which is “guaranteed” [fait l’objet d’une garantie] by the “relevant entity” [personne concernée].

What entities are Regulated Entities under the French Jurisdictional Module?

A Regulated Entity under the French Jurisdictional Module is an Adhering Party that has identified itself as a Regulated Entity in its Adherence Letter with respect to this French Jurisdictional Module and that is, as defined in the French Regulation, any of the following:—

(a)        an “entity” [entité] or the “entities belonging to a group” [entités appartenant à un groupe] that is included in the current list of the “global systemically important banks” [établissements d’importance systémique mondiale] established on a “consolidated basis” [base consolidée] by the “French Prudential Supervision and Resolution Authority” [Autorité de contrôle prudentiel et de résolution] in accordance with paragraph VI of Article L. 511-41-1 A of the “French Monetary and Financial Code” [Code monétaire et financier] (ACPR GSIB);

(b)        an “entity” [entité] or the “entities belonging to a group” [entités appartenant à un groupe] that is included in the list of “systemic important banks” [établissements d’importance systémique] established on a “consolidated basis” [base consolidée] by the “French Prudential Supervision and Resolution Authority” [Autorité de contrôle prudentiel et de résolution] in accordance with paragraph VII of Article L. 511-41-1 A of the “French Monetary and Financial Code” [Code monétaire et financier] (ACPR DSIB); or

(c)        an “entity or an entity of the group to which it belongs” [entité ou une entité du groupe auquel elle appartient] meeting the criteria of Article L. 613-34 I of the “French Monetary and Financial Code” [Code monétaire et financier] and that is not an ACPR GSIB or an ACPR DSIB (Other Regulated Entity).

When do the amendments under the French Jurisdictional Module become effective?

The amendments under the French Jurisdictional Module become effective on the later of the applicable compliance date for a Module Adhering Party and a Regulated Entity Counterparty under the French Regulation and the “Implementation Date” with respect to a Module Adhering Party and a Regulated Entity Counterparty.

Even if a party adheres to the French Jurisdictional Module prior to the applicable compliance date under the French Regulation, amendments will not be made by the French Jurisdictional Module until required under the French Regulation.

What are the compliance dates for the French Regulation?

If the Covered Agreement is between an ACPR GSIB and:

(a) a “global systemically important bank” [entité du groupe bancaire d’importance systémique mondiale] as mentioned in the annually updated list of the Financial Stability Board (FSB GSIB), the compliance date for the French Regulation is December 18, 2017;

(b) an ACPR DSIB, the compliance date for the French Regulation is December 31, 2019;

(c) a “banking counterparty” [contrepartie bancaire] that is neither an FSB GSIB nor an ACPR DSIB, the compliance date for the French Regulation is June 1, 2020; or

(d) any other “counterparty” [contrepartie], the compliance date for the French Regulation is December 31, 2020.

If the Covered Agreement is between an ACPR DSIB and:

(a) an FSB GSIB, the compliance date for the French Regulation is December 31, 2019;

(b) an ACPR DSIB, the compliance date for the French Regulation is June 1, 2020;

(c) a “banking counterparty” [contrepartie bancaire] that is neither an FSB GSIB nor an ACPR DSIB, the compliance date for the French Regulation is December 31, 2020; or

(d) any other “counterparty” [contrepartie], the compliance date for the French Regulation is June 1, 2021.

If the Covered Agreement is between an Other Regulated Entity and:

(a) an FSB GSIB, the compliance date for the French Regulation is June 1, 2020;

(b) an ACPR DSIB, the compliance date for the French Regulation is December 31, 2020;

(c) a “banking counterparty” [contrepartie bancaire] that is neither an FSB GSIB nor an ACPR DSIB, the compliance date for the French Regulation is June 1, 2021; or

(d) any other “counterparty” [contrepartie], the compliance date for the French Regulation is December 31, 2021.

How do I sign up to the French Jurisdictional Module?

Please see the general ISDA Jurisdictional Modular Protocol FAQs for information on adherence to Jurisdictional Modules and the ISDA Jurisdictional Modular Protocol.