Legal

Michael Beaton of Document Risk Solutions explains the Standard Credit Support Annex (SCSA), which is not mandatory for counterparts to derivatives transactions, but is likely to significantly impact the future shape of the derivatives industry.

In a DerivSource Spotlight article, Sapient Global Markets explores some of the key impacts regulatory reforms will have on the documentation of OTC derivatives.

Two recent cases before the High Court have returned to the question first raised in Marine Trade S.A. v Pioneer Freight Futures Co Ltd as to whether or not a non-Defaulting Party to an ISDA Master Agreement is entitled to withhold payment to a Defaulting Party pursuant to Section 2(a)(iii) whilst simultaneously enforcing the Defaulting Party’s payment obligation in full.

The International Swaps and Derivatives Association, Inc. (ISDA) today outlined key provisions to the Standard Credit Support Annex (SCSA) proposal as part of its continuing efforts to increase efficiency and improve standardization in the over-the-counter (OTC) derivatives markets.

The recently published FIA-ISDA cleared derivatives execution agreement is the industry’s first attempt to regulate the relationship between parties entering trades for central clearing. Documentation Risk Solutions’ managing director Michael Beaton explains the structure of this new legal agreement.

The Futures Industry Association and the International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of the FIA-ISDA Cleared Derivatives Execution Agreement as a template that can be used by participants in the cleared swaps markets in negotiating execution-related agreements with counterparties to over-the-counter derivatives that are intended to be cleared.

To support DerivSource webinar on "Managing OTC Derivatives Documentation in a Central Clearing Environment," we are offering a list of our favorite resources for derivatives professionals in need of further reading or resources that can help explain some of the jargon used int the derivatives industry.

Resources:

Some professionals have recommended the CFTC.gov website for its resources on the Dodd-Frank Act legislation, regulatory meetings and related reports:

The International Swaps and Derivatives Association, Inc. (ISDA) reacts to Mr Justice Briggs judgment handed down today in the case of Lomas and others v JFB Firth Rixson, Inc and others. Four out-of-the-money counterparties had declined to terminate their ISDA Master Agreements with Lehman Brothers International Europe (LBIE), relying on Section 2(a)(iii) of the ISDA Master Agreement to not make payments that they would, but for Section 2(a)(iii), have been required to make to LBIE.