Central counterparty master bridge agreements and updates to the 2(a)(iii) default provision may not make for headlines as sexy as last year when it comes to the International Swaps and Derivatives Association 2011 Annual General Meeting in Prague, but they will certainly get industry-types excited.
ISDA aims to reveal proposals around the central counterparty master bridge framework it’s been working on (DW, 1/19) and updates to the 2(a)(iii) default provision of the Master Agreement (DW, 1/20) at next month’s Annual General Meeting in Prague.
The intent of the master bridge agreement is for counterparties to be able to net trades between each other in the event of a default, even if the trades were are being held by separate CCPs. One official said that the idea from the working group will be proposed to the membership at large during the AGM for further discussion. The master bridge will not interfere with any of the individual CCP’s frameworks, but be overlaid on top of it.
As for the 2(a)(iii) provision, officials have been working to make a more clearly defined time frame in which the non-defaulting counterparty may terminate a transaction. This will likely include both a defined minimum automatic stay before the non-defaulting party may invoke this right and a deadline by which they must either use the right or lose it