The International Swaps and Derivatives Association has extended the deadline for hedge funds to sign up to its novation protocol from Oct. 31 to Nov. 30. The last-minute move is intended to bolster the number of parties adhering to the protocol, ahead of today's implementation deadline for the dealers and hedge funds which have already signed up.
Even with hundreds of hedge funds signing up in the final days last week--contributing to a total of nearly 500 by the end of the day Friday--a number of big names are still holding out. Karel Engelen, policy director at ISDA, said he hoped the extension would encourage more parties still looking into the protocol to eventually sign up. The possibility for extending the deadline was written into the protocol in September. ISDA's decision to exercise this option was not a surprise to those involved, according to Engelen.
What remains to be seen today, said hedge fund lawyers, is whether dealers will hold renegade funds to the terms of the ISDA Master Agreement, which requires prior written consent for third-party trade assignments. Several firms were reported to have sent this message in letters to clients last week.
