(As redacted from the ISDA® website and announcements) On 4 December 2020, following discussions with The Financial Conduct Authority in the UK ICE Benchmark Administration Limited (IBA) announced that it intends to cease publication of the below benchmarks: The following LIBOR settings, to take effect after the publication of LIBOR on Friday, December 31, 2021: o EUR LIBOR-all tenors (Overnight, 1 Week, 1, 2, 3, 6 and 12 Months) o CHF LIBOR-all tenors (Spot Next, 1Week,1, 2,

Source: ISDA® Quarterly Vol 6, Issue 2: May 2020 (pages 36 to 39) The figures from ISDA®'s latest margin survey gives an interesting insight into the statistics for initial margin (IM). The first four phases of initial margin implementation have now been completed meaning that a total of over 50 firms are currently in scope for IM. The 20 dealer firms that were in scope in the first phase of the IM regulations collected $173.2 billion of IM at the end of 2019. This was $15.3

When considering whether the force majeure clause could be triggered as a result of the COVID-19 crisis, one needs to break down the clause into its various elements: 1. The clause only applies to the office where payments or deliveries are made, and the force majeure event prevents that office from (i) performing its obligations to pay or receive payments, or (Iii) complying with any other material provision of the ISDA®. The force majeure event must prevent or make it imp

Central Clearing is a key component of regulatory reforms for OTC derivatives. A centrally cleared transaction will be cheaper than a bespoke bilateral. This extract, from a paper called 'The Economics of Central Clearing: Theory and Practice' by Craig Pirrong, explains why: Executive Summary (pages 2-3): Regulations requiring the clearing of certain OTC derivatives through central counterparties ('CCPs') are causing a profound change in market structure and trading practices

Central clearing of standardised OTC derivatives products is already a reality in the US and EU markets. The Financial Markets Act has made provision for it in the South African market, and it will be implemented in phase 3 of the phasing-in process (potentially by Q3 of 2019). This is not far away, when one considers the large number of new legal documents that need to be put in place to support central clearing. The ISDA Master Agreement can form the basis of your clearing

Currently London is the hub of clearing euro-denominated derivatives. For clearing houses to be authorized under EMIR, they have to be approved by ESMA. Since Brexit negotiations began, it is clear that the EU wish to move euro-denominated derivatives clearing into the EU. Doing so could force clearing houses located in London to move into Europe. The European Commission has drafted a new law that will require systemically important firms in the EU to be overseen by the EU au

The 2014 ISDA® Credit Derivatives Definitions (‘2014 Definitions’) are a key component of any credit derivative transaction done between parties. The definitions contain many optional provisions, which need to be elected or disapplied in any confirmation. Two such provisions are the Mod R or Mod Mod R clauses. These provisions aim to reduce the moral hazard of receiving the ‘cheapest to deliver’ assets when parties are closing out and settling transactions following a restruc

This fact sheet explains the many different industry sectors who use derivatives to effectively manage their business and financial risk. Who Uses Derivatives - and Why? If you would like to find out more about the legal agreements used to document OTC derivatives transactions, come along to DeriviDoc courses as follows: The ISDA® Master Agreement Tuesday 11 July 2017 in Johannesburg Collateral and the CSA Master Agreements Wednesday 12 July 2017 in Johannesburg #derivatives

​With central clearing of standardised OTC derivative contracts gaining traction under the EMIR and Dodd Frank regulations, market participants are becoming more focussed on diversifying the types of assets that they can post to the clearing house as collateral. This Reuters article gives an interesting insight into how LME clearing house is permitting commodities to be posted as Initial Margin for commodities trades that are cleared. Ultimately, once all the margin rules are

During the recent ISDA® AGM held in Lisbon in May, a panel discussion highlighted a few of the challenges that have arisen in the clearing space, and this article aims to highlight some of these. Regulators have imposed higher levels of margin on uncleared OTC derivative transactions. Regulators have purposefully done this in order to encourage parties to clear transactions, since clearing is designed to reduce systemic risk. The concern is that there are certain products, wh

[This article was first published by Rand Merchant Bank in 2011.] Over the years companies have used derivatives transactions increasingly as a means to hedge and manage their business and financial risk. However, following the financial crisis in 2008, and in particular the collapse of Lehman Brothers, more scrutiny has been placed on the derivatives business, and how it can potentially wreak havoc in an unregulated environment. The financial crisis highlighted the need to e

As European financial counterparties start gearing up for the 01 March 2017 deadline for posting Variation Margin, your institution may have received requests to sign-up to a new CSA, amend your current CSA to comply with the margin regulations, or sign-up to the Variation Margin Protocol. The Variation Margin Protocol is a questionnaire-style protocol where adhering parties have to complete a questionnaire, exchange questionnaires with each of their counterparties and then m

The ISDA® Agreement is comprised of 2 parts: the master terms (boiler plate legal provisions) and the schedule (elections and optional provisions, credit and jurisdictional provisions). The ISDA® can therefore be ‘tailor-made’ to suit the counterparty and the particular credit risks or jurisdictional requirements of the counterparty by negotiating terms into the schedule. The main credit provisions to consider in the negotiation of an ISDA® are as follows: 1. Specified Entity

​DeriviDoc highlights an interesting perspective on the impact of Brexit on ISDA® documentation: Read here. Contact us for further information. #Brexit #ISDA

On 13th April 2016, ISDA® published the 2016 Credit Support Annex for Variation Margin, governed by New York law (“NY VM CSA”). This was followed on 29th April 2016 by the publication of the 2016 Credit Support Annex for Variation Margin, governed by English law (“Eng VM CSA”). More recently the Japanese law version of the VM CSA was also published. These new documents will enable participants in the un-cleared derivatives market to comply with new variation margining require