Featured Product

    ISDA Proposes to Amend Credit Derivatives Definitions Related to NTCEs

    March 14, 2019

    ISDA proposed amendments to the 2014 ISDA Credit Derivatives Definitions to address issues related to the narrowly tailored credit events (NTCEs). Feedback was requested by April 10, 2019. NTCEs are arrangements with corporations that cause a credit event leading to settlement of credit default swap (CDS) contracts while minimizing the impact on the corporation. ISDA also published the views of its Chief Executive Officer Scott O'Malia on the proposed amendments.

    The proposal includes the following amendments:

    • Proposed Amendment to "Failure to Pay" Definition and Publication of Guidance Memo. The definition of the Failure to Pay Credit Event (Section 4.5 of the Definitions) will be amended to add a requirement that the relevant payment failure result from or in a deterioration in creditworthiness or financial condition of the Reference Entity. This requirement would apply to corporate and financial Reference Entities but would not apply to sovereign Reference Entities. To provide additional clarity to apply the new test, a guidance memo will be published. The guidance memo will set out the purpose of this requirement and a non-exhaustive list of factors that should be taken into account in making a determination under the new test. The proposed amendment to the Failure to Pay definition and text of the guidance memo has been attached as Annex 1. 
    • Proposed Clarification to "Outstanding Principal Balance" Definition. Section 2.10 of the Definitions requires the Outstanding Principal Balance to be determined using the “Quantum of the Claim,” which is determined in accordance with the applicable law. Section 2.10 of the Definitions will be amended to add a clarification that the “applicable law” includes any bankruptcy or insolvency law that would apply to the Reference Entity if it were to enter bankruptcy or insolvency proceedings. The proposed amendment to the Outstanding Principal Balance Definition has been attached as Annex 2.

    These proposals were discussed by the ISDA working group comprising members of the ISDA Credit Steering Committee and additional ISDA members active in the CDS market. Although the working group has not yet completed its work and, therefore, may have additional proposals, these amendments represent some of the most important aspects of the proposed changes agreed by the working group to date.

     

    Related Links

    Comment Due Date: April 10, 2019

    Keywords: International, Banking, Securities, NTCE, Credit Default Swap, Credit Derivatives Definitions, Failure to Pay, Credit Risk, ISDA

    Related Articles
    News

    MAS Amends Notice 610 on Reporting Templates for Banks in Singapore

    MAS published amendments to Notices 610 and 1003 related to submission of statistics and returns, along with the reporting templates and frequently asked questions (FAQs) associated with these Notices.

    January 24, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module on Supervisory Review Process

    HKMA is issuing, by notice in the Gazette, revised versions of two Supervisory Policy Manual modules as statutory guidelines under section 7(3) of the Banking Ordinance. The Supervisory Policy Manual modules are CA-G-5 on “Supervisory Review Process” and SB-2 on “Leveraged Foreign Exchange Trading.”

    January 24, 2020 WebPage Regulatory News
    News

    PRA Amends Pillar 2 Capital Framework for Banks

    PRA published the policy statement PS2/20 that contains the final amendments to the Pillar 2 framework and provides feedback to responses to the consultation paper CP5/19 on updates related to Pillar 2 capital framework.

    January 23, 2020 WebPage Regulatory News
    News

    FED Proposes to Revise Information Collection Under Market Risk Rule

    FED proposed to revise and extend, for three years, FR 4201, which is the information collection under the market risk capital rule.

    January 22, 2020 WebPage Regulatory News
    News

    HKMA Consults on Stay Rules on Financial Contracts Under FIRO

    HKMA published proposals for making rules related to contractual stays on termination rights in financial contracts for authorized institutions under FIRO or the Financial Institutions (Resolution) Ordinance (Cap. 628).

    January 22, 2020 WebPage Regulatory News
    News

    MAS Amends Notices on Minimum Liquid Asset Requirements for Banks

    MAS published amendments to Notices 1015, 613, and 649 related to the minimum liquid assets (MLA) requirements.

    January 21, 2020 WebPage Regulatory News
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022

    OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022.

    January 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    News

    OSFI Consults on Instruction Guide for Termination of Pension Plan

    OSFI is consulting on draft revisions to the instruction guide for termination of a defined benefit pension plan.

    January 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4535