ISDA proposes new dispute resolution process for collateral calls in derivatives markets - Teigland-Hunt LLP Client Alert
• Comments due to ISDA by Friday, August 7th
In order to satisfy recent industry commitments to regulators, the ISDA Collateral Committee has issued a comprehensive proposal to improve collateral call dispute resolution processes for OTC derivatives (the “DR Proposal”). A complete draft of the proposal is available on ISDA’s website (www.isda.org). The public comment period on the proposal closes Friday, August 7, 2009.
Although ISDA’s Credit Support Annexes (or CSAs) already contain dispute resolution provisions for collateral calls, the DR Proposal seeks to improve and enhance these provisions as well as processes currently used in the marketplace to resolve call disputes in response to concerns raised by regulators last fall. Specifically the DR Proposal aims to:
• achieve timely identification of the root causes of disputed collateral calls;
• ensure the prompt movement of as much collateral as the parties can mutually agree;
• provide the parties with a flexible range of methods to narrow and/or resolve their dispute consistent with their risk tolerance;
• create consistent and predictable processes, timing and behavior in case of disputes across the market; and
• eliminate uncertainties and delays that increase risk for market participants.
See the Client Alert attached for more details.
