The International Swaps and Derivatives Association, Inc. (ISDA) today announced that it will reopen its ‘Small Bang Protocol’, which allows for the incorporation of auction settlement terms following a Restructuring Credit Event into standard CDS documentation.
“The successful implementation of our ‘Small Bang Protocol’ was a major achievement for ISDA and for the industry,” said Robert Pickel, executive director and chief executive officer, ISDA. “I am pleased to see demand from new entrants to sign up to the Protocol and benefit from its efficiencies.”
The adherence period for the Protocol will reopen on Monday, October 5 and will run until January 31, 2011. The ‘Small Bang Protocol’ was originally open from July 14 to July 24, 2009. Over 2,000 parties adhered to the Protocol.
A particular feature of the ‘Small Bang Protocol’ is its forward-looking provisions, which will amend transactions prospectively to incorporate the amendments to industry documentation, such as index documentation, that are effected by the Protocol. This feature will allow parties to continue to trade using existing industry standard documentation even while these documents are being updated to incorporate the provisions contained in the Protocol. The process of updating these documents will be completed by the end of the new adherence period.
On July 9, ISDA launched a webcast outlining key points of its ‘Small Bang Protocol’ and Restructuring Supplement. The webcast, which includes a brief slide presentation, discusses the implementation of an auction settlement following a Restructuring Credit Event, and is available at http://isda.mediasite.com/isda/Viewer/?peid=0f704973119e4b69bb4dc9eb448cb937.
The text of the Protocol and form of adherence letter, guidance on the mechanics of the Protocol, and answers to frequently asked questions are available at www.isda.org.
