The International Swaps and Derivatives Association is planning to release its debut template for the trading and settlement of credit-default swaps referenced to asset-backed securities this month. The initiative comes as trading in ABS protection has surged in recent months and dealers have been anxious to codify market standards. ISDA has been planning to release the template in the second quarter since last year.
Louise Marshall, spokeswoman for ISDA in New York, said the template is targeted at the inter-dealer market for ABS-default swaps and the trade group is also working on a template intended for monolines active in the burgeoning market (DW, 5/20). Those guidelines are likely to be more based on a pay-as-you-go system, she added. Although Marshall declined to speculate if ISDA documentation would prompt new investors into taking out protection on asset-backeds, she noted it certainly will not hurt liquidity. "It always helps to have a recognized, non-partisan standard," she said.
