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December 21, 2009
ISDA publishes new dispute resolution procedures for collateral calls in derivatives markets - Complinet, Inc., by Lauren Teigland-Hunt, Ryan Patino and Joshua Riezman
- Procedures currently in ‘Experimental Pilot Program’ stage
- Market-wide implementation to occur mid-2010
In order to satisfy recent industry commitments to regulators, the ISDA Collateral Committee recently published the 2009 Collateral Dispute Resolution Procedure (the “DR Procedures”), a comprehensive set of procedures that are intended to improve the way in which collateral call disputes in OTC derivatives markets are resolved. The DR Procedures were developed by the ISDA Collateral Committee in consultation with other ISDA committees and trade associations representing buy side market participants and were submitted to the Federal Reserve Bank of New York and other market regulators on September 30, 2009. The DR Procedures are currently being tested by several dealer and buy side firms as part of an experimental pilot program, with broader market-wide implementation expected to take place in 2010.
See the attached article for more details.
Published by Complinet, Inc., www.complinet.com, the leading provider of compliance intelligence for the financial services industry
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September 25, 2009
OTC Derivative Contracts in Bankruptcy: The Lehman Experience - NY Business Law Journal, by GuyLaine Charles
Abstract: In this article, Ms. Charles discusses the “safe harbor provisions” of the U.S. Bankruptcy Code that exempt Over-the-Counter (“OTC”) derivative contracts from certain debtor-protective provisions. The article explains the standardized documentation of OTC derivative transactions and summarizes the contractual terms that allow the non-defaulting party to terminate, liquidate, net and set-off obligations notwithstanding the bankruptcy of its counterparty. Ms. Charles then illustrates how the bankruptcy of Lehman Brothers Holdings Inc. and related debtors has provided a dramatic test of the safe harbor provisions in the context of the failure of a major financial institution, and how OTC derivative counterparties have relied on those provisions to limit their exposure to the Lehman debtors.
This article was originally published in the NY Business Law Journal, Vol. 13, No. 1, Spring 2009.
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September 21, 2009
Understanding emissions trading: navigating the regional greenhouse gas initiative - Complinet, Inc., by Lauren Teigland-Hunt and Sara Hayes
Abstract: Although a federal emissions reduction program targeting greenhouse gases has yet to be implemented in the United States, a number of regional and voluntary emissions reduction programs have emerged and created markets for the trading of US greenhouse gas emissions products. The program with one of the largest and most liquid of these markets is the Regional Greenhouse Gas Initiative (RGGI). This article provides an overview of the RGGI program, followed by a discussion of various methods for participating in this market and some of the risks unique to RGGI products.
Published by Complinet, Inc., www.complinet.com, the leading provider of compliance intelligence for the financial services industry.
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August 06, 2009
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.
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July 17, 2009
ISDA's "Small Bang" in a Nutshell: CDS Auctions Will Now Cover Restructuring Credit Events - Teigland-Hunt LLP Client Alert
- Deadline for Adherence: Friday, July 24th
As described in our alert of April 3, 2009, the International Swaps and Derivatives Association, Inc. (ISDA) published documentation in March that requires adhering market participants to settle certain credit default swap (CDS) transactions via market auctions. Parties that adhered to the “Big Bang” protocol at that time effectively agreed to settle existing CDS trades through the auction process whenever auctions are held in respect of certain credit events. Mandating the auction settlement method in this way has been perceived by regulators as critical to the proper functioning and integrity of the CDS market as a whole.
Because of the complexities involved in settling a “Restructuring” credit event by auction, ISDA deliberately excluded Restructuring events from the auction hardwiring process that took place in March. ISDA has since developed the necessary methodology for settling Restructuring events via auctions. As further summarized below, ISDA’s new “Small Bang” protocol will now hardwire the auction settlement method so that it can apply to existing CDS trades that are to be settled following the occurrence of Restructuring credit events.
Please see the Client Alert below for more details.
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July 03, 2009
Judge Sets September 22, 2009 Bar Date for Lehman Claims, Requires Questionnaires for Derivatives Claims - Teigland-Hunt LLP Client Alert
- October 22, 2009 set as last day to submit Derivatives and Guarantee Questionnaires
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June 29, 2009
U.S. House of Representatives Passes Landmark Climate Bill Calling for Cap and Trade Program to Reduce Emissions - Teigland-Hunt LLP Client Alert
The American Clean Energy and Security Act of 2009 (H.R. 2454) (“ACES”) was passed by a narrow vote late on Friday, June 26th. Democratic leadership and the Administration delayed a vote until late in the evening, making last minute changes and eventually accumulating enough votes to pass the bill.
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June 26, 2009
Citing significant number of objections, Judge Peck adjourns hearing on Lehman's motion to establish procedures for U.S. bankruptcy claims - Teigland-Hunt LLP Client Alert
- New hearing on motion scheduled for June 29, 2009 at 2:00 p.m.
- Lehman proposed to extend bar date to September 1, 2009 at earliest
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June 14, 2009
[UPDATED] Derivatives claimants cite unnecessary and onerous procedural requirements in objecting to Lehman's motion to establish procedures for U.S. bankruptcy claims - Teigland-Hunt LLP Client Alert
- Hearing on motion and objections originally scheduled for June 17, 2009 has been adjourned to June 24, 2009 at 10:00 a.m.
- Lehman’s proposed bar date: August 24, 2009
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April 03, 2009
The New Face of Credit Default Swaps: Auction Hardwiring and the Determinations Committee - Teigland-Hunt LLP Client Alert
Abstract: On March 12, 2009, the International Swaps and Derivatives Association, Inc. (ISDA) published documentation to allow the incorporation of an auction settlement mechanism into standard credit default swap (CDS) transactions. The auction settlement method has been perceived by regulators as critical to the proper functioning of the CDS market as a whole.
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January 31, 2009
The Evolution of Standardization in the OTC Derivatives Market - MFA Reporter
Abstract: Lauren Teigland-Hunt and GuyLaine Charles discuss the evolution of the OTC derivatives industry since its emergence in the 1980s. The article provides an overview and analysis of three key areas: the documentation, confirmation and clearance of OTC derivatives, in which specific initiatives have brought, or will bring noticeable changes to the industry.
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January 28, 2009
Meet Lehman's Liquidators: Alvarez & Marsal to Liquidate Investment Bank, Reconcile Derivative Claims - Teigland-Hunt LLP Client Alert
Abstract: Lehman Brothers Holdings Inc. and its affiliated debtors have retained Alvarez & Marsal North America, LLC (“A&M”) as chief restructuring consultants. A&M’s key responsibilities are to maximize recovery of Lehman assets and mitigate potential Lehman liability, and this mandate includes the reconciliation of claims related to the Lehman entities’ derivative contracts.
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January 23, 2009
Customer claims against LBI due January 30th for maximum protection - Teigland-Hunt LLP Client Alert
Abstract: All customers of Lehman Brothers Inc. (LBI) that wish to be eligible for the maximum protection that may be afforded to them under the Securities Investor Protection Act are required to file their claims with the LBI Trustee no later than Friday, January 30, 2009.
