The International Swaps and Derivatives Association plans to release a draft update to the 2005 Novation Protocol on Thursday, with the hope of launching a final version in February. The document, officially called the ISDA Novation Protocol II but known colloquially as the Evergreen Protocol or NPII, is intended to make signing up easier for new market entrants and other dealers and funds that missed committing to the original form (DW, 12/23). The adherence period for the original protocol closed Nov. 30 with more than 2,000 market participants signed up.
Katherine Darras, ISDA assistant general counsel, said the new protocol will not have an expiration date, and will be subject to an annual perspective revocation in which adhering parties can close themselves to new entrants. There will be no fundamental differences between the two documents--both designed for documenting third-party assignments on credit-default swaps--but adherents to the original protocol wanting to trade with signatories to the new protocol will have to sign up to both. "It will be a free-standing protocol that operates separately, like a twin," Darras said. She confirmed the release and said the finalization will depend on the market response to the draft.
