A protocol is a multilateral contractual amendment mechanism which has been used to address changes to ISDA standard contracts since 1998.
The first protocol launched by ISDA was in 1998, the ISDA EMU Protocol which addressed contractual and legal certainty issues arising from the implementation of the European Monetary Union. This protocol and many others since 1998 have provided an efficient way of implementing industry standard contractual changes over a broad number of counterparties.
The fundamental benefit to an adhering party to a protocol is that it eliminates the necessity for costly and time-consuming bilateral negotiations.
ISDA acts, for certain purposes, as an agent for participating parties and posts the Protocol on its website, receives Adherence Letters and updates the web site with participant information during the Adherence Period.
Changes from the traditional adherence process
Market participants who adhered to an ISDA protocol in recent years are familiar with a process that involved submitting signed and conformed copies of an adherence letter to a designated email address.
A new process was established in August 2012, when ISDA, in an effort to provide a more streamlined and efficient method, developed a technical solution to further automate adherence. The adhering party will still need to provide a letter signed by an authorized signatory in order to validate the adherence, but the new process will make this easier and will allow that adhering party to monitor the status of that adherence from the submission stage to the approval stage.
Some protocols remain open using the Traditional Adherence process, and can be found here.