TheInternational Swaps and Derivatives Association has held a preliminary meeting to discuss setting up a bond-swap definitions template. "[It] would help give the market conformity and standardization, if people choose to use it," said Ilene Froom, chair of the working group and v.p. and assistant general counsel at JP Morgan.
The purpose of this first meeting, said Katherine Darras, assistant general counsel at ISDA, was to discuss the potential structure, geographic coverage and direction of the template. It was also to answer questions and determine the issues market players want the definitions to treat.
Because bond swaps are a hybrid product, Froom explained, "This is a project that appeals both to equity and fixed-income participants." Convertible bond swaps have an equity component, while straight debt is exclusively fixed income.
One issue discussed at the meeting Oct. 5 was whether the project should split into two templates-one for the U.S., which trades mostly corporate names, and another for Europe, which trades mostly sovereigns. In 2004, Darras said, ISDA created three master templates for inter-dealer equity-swap confirmations--one each for the Americas, Japan and the rest of Asia.
It is too early to forecast a timeline, said Louise Marshall, spokeswoman ISDA. But projects such as this typically take several months to complete.
