Richard Prager, Managing Director and Head of Global Trading at BlackRock, said: “The derivatives industry`s collaboration has resulted in a modular waiver document that meets the needs of all market participants, promotes a deep, liquid and efficient market structure and supports the principles of the Dodd-Frank Act.” Stephen O`Connor, Chairman of ISDA and Chief Executive Officer of Morgan Stanley, said: “Promoting greater use of central clearing by all market participants is one of the key ways in which ISDA works to ensure the safety and efficiency of OTC derivatives markets. This agreement is a further step towards that goal. Michael Dawley, FIA Chairman and Chief Executive Officer of Goldman Sachs, said: “We expect this agreement to help create a solid foundation for the increased use of clearing in the global OTC derivatives market. We are very pleased that this industry initiative has been carried out and thank all members of the working group for their contribution to the development of this important agreement. The publication of this agreement builds on previous INITIATIVES BY FIA and ISDA to provide the derivatives industry with model agreements and standardized legal documentation, such as the FIA International Uniform Brokering Enforcement Services Agreement and the ISDA Framework Agreement. The agreement aims to provide an initial structure to document the implementation of cleared swaps until the full implementation of the reforms prescribed by the Dodd-Frank Act in the United States and similar reforms in other parts of the world. The FIA and ISDA recognise that many provisions of the Agreement will be replaced by new regulatory requirements as well as by the specific rules of each swap execution platform and clearing organisation. Pending the adoption and implementation of the rules and regulations applicable to the cleared swap market, the agreement contains certain conditions that market participants entering into execution agreements may take into account. This is the first version of the document. The FIA and ISDA expect the agreement to be updated and improved over time as the cleared swap market continues to evolve. The 2017 ISDA/AIF agreement on the execution of derivatives cleared under uk non-US law is a model for market participants to negotiate execution-related arrangements with swap counterparties to be cleared. The document is intended to facilitate the conclusion and clearing of derivatives transactions with one or more CCPs outside the United States and may be used in conjunction with the ISDA/AIF Client Clearing Addendum. This document has been updated to reflect the new maturities under MIFID II for the submission of information on cleared derivative transactions between counterparties on a bilateral basis.
A blackline comparison with the 2016 version will be published next to this document. FIA and ISDA believe that this agreement will support the introduction of central clearing in global derivatives markets by providing a model legal documentation to support derivatives clients. FIA and ISDA stress that the use of the agreement is voluntary; specifically. there is no regulatory or other obligation for a market participant to use this Agreement. The Agreement will be published as a template that participants can use at will and that may not be necessary or appropriate in all circumstances. This Agreement sets out the procedures by which a transaction is subject to clearing, including obligations for each party to confirm the transaction within the prescribed time limits. The agreement specifies that once a clearing transaction has been accepted, each party`s agreement with its clearing company will apply and neither party to that agreement will have any further obligation to the other. Second, it sets out the rights and obligations of the parties in the event that a transaction is not accepted for set-off. Third, the agreement contains optional annexes for parties who wish to have a clearing company as a party to the agreement. The agreement is neutral for the clearing house. * The FIA-ISDA Cleared Derivatives Addendum is a model used by market participants for cleared swaps to document the relationship between a futures commission (FCM) registered merchant and its client for the purpose of clearing OTC derivatives transactions (referred to as “Cleared Derivatives Transactions”) under U.S. law.
The Addendum is generally designed to supplement the parties` futures clearing agreement, and the Addendum replaces that underlying agreement only with respect to cleared derivatives transactions. Among other provisions, the addendum contains statements that reflect the U.S. regulatory regime for cleared derivatives transactions, procedures for FCM to enter into and liquidate derivative transactions after a closing event or tax liquidation event, and tax provisions relating to cleared derivatives transactions. The AIF-ISDA Alternative Addendum on Cleared Derivatives 2018 is an alternative to the AIF-ISDA Addendum on Cleared Derivatives published by ISDA and FIA in 2012 and does not replace this form. Fia offers model agreements for market participants that can be used in the negotiation of netting and execution agreements with counterparties. .