ISDA and FIA Europe Publish European Cleared Derivatives Execution Agreement

May 15, 2014 04:33 AM
Press Release

LONDON, MAY 15, 2014—The International Swaps and Derivatives Association, Inc. (ISDA) and FIA Europe today jointly announced the publication of the ISDA/FIA Europe Cleared Derivatives Execution Agreement for principal-to-principal client clearing.

The ISDA/FIA Europe Cleared Derivatives Execution Agreement is designed to be used as a template for market participants when negotiating execution agreements under English law for swaps that are intended to be cleared by central counterparties located outside of the U.S.

The Agreement was developed with the assistance of a working group of both buy-and sell-side institutions in the European cleared over-the-counter (OTC) derivatives markets.

"A huge amount of progress has already been made in moving to central clearing, contribution to safer, more efficient markets. But with the first clearing mandates expected to come into force in Europe late this year or early in 2015, it's becoming increasingly important that standard documentation exists outside of the U.S. to help all market participants continue the transition to clearing," said Robert Pickel, ISDA Chief Executive Officer.

"This Agreement represents the latest successful step forward by the industry in the risk management of its cleared swaps business. It stands as a testament to what can be achieved through the collaborative efforts of the members of FIA Europe and ISDA to further standardize documentation across the marker, for the mutual benefit of both sell-and buy-side participants," said Simon Puleston Jones, Chief Executive Officer of FIA Europe.

The Agreement sets out the rights and obligations of each counterparty to a trade that is intended to clear. It describes the process for submitting a trade to a clearing house, as well as the fallback provisions should a transaction not be accepted for clearing. Parties may use this agreement and amend it as necessary to reflect their own circumstances. It can be used in conjunction with the ISDA/FOA Client Cleared OTC Derivatives Addendum.