ISDA published the "2019 German Bank CDS Protocol" (the "Protocol"), which enables market participants to amend existing transactions on German bank reference entities to apply the "European senior non-preferred financial corporate transaction type."
According to ISDA, the Protocol is intended to "reflect changes being made to credit default swaps . . . on German bank reference entities." As previously covered, the ISDA Credit Steering Committee recommended changes to documentation practices for credit default swap transactions that reference German banks. The Protocol is relevant to all parties that entered into credit derivatives transactions that reference German banks.
The Protocol:
- changes the Transaction Type from "Standard European Financial Corporate" to "Standard European Senior Non Preferred Financial Corporate" or "European Financial Corporate" to "European Senior Non Preferred Financial Corporate"; and
- replaces all references to a Credit Derivatives Physical Settlement Matrix published before December 8, 2018 with the Credit Derivatives Physical Settlement Matrix published on December 8, 2017 for relevant transactions.
The Protocol is open for adherence by ISDA members and non-members from February 6, 2019 until February 27, 2019.
Commentary / Nihal Patel
Market participants interested in this Protocol should note the relatively short adherence period: the cut-off date is 5:00 p.m. (New York time) on February 27.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.