Robert Pickel, executive director and ceo, International Swaps and Derivatives Association (ISDA), has made the following statement to address Treasury Secretary Henry Paulson’s prepared remarks about the recommendations from the President’s Working Group on Financial Markets.
"We welcome Secretary Paulson’s recognition of the value of ISDA’s cash settlement mechanism and echo his support for industry-led initiatives. The processing of privately negotiated derivatives has always been a top priority for ISDA. We are dedicated to ensuring that the powerful growth in the industry continues, and that these tools are allowed to perform their critical risk management function."
"The cash settlement mechanism has been successfully implemented in nine events in North America. Operationally the mechanisms are in place to run serial auctions in the immediate future, if market conditions so require. To date it has not been apparent to the industry that the benefits of hardwiring the mechanism outweigh the benefits of flexibility that the current system provides. However, we are committed to continue exploring with the industry the most efficient way forward, including hardwiring the auction mechanism into relevant ISDA documentation."
