2009

ISDA ®

International Swaps and Derivatives Association, Inc.

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 ISDA 2009 ®

A Yearbook of ISDA Activities

International Swaps and Derivatives Association, Inc.

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 OFFICES
NEW YORK
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New York, NY 10017
Phone: (212) 901-6000
Fax: (212) 901-6001

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Phone: + 44 (0) 20 3088 - 3550
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Phone: +852 2200 5900
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Phone: +65-6538-3879
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Phone: (813) 5733-5500
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BRUSSELS
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Tel: (322) 401 87 60
Fax: (322) 401 68 68

ii

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 TABLE OF CONTENTS

FOREWORD 1

DOCUMENTATION PROJECTS SUMMARY 6

PRODUCTS & USERS 11

CDS Hardwiring 11
Interest Rates 13
Natural Catastrophe Swaps 15
Derivatives Users Committee 16
Equity Derivatives 17
Energy, Commodities & Developing Products 19
Japan Property Derivatives 20

INFRASTRUCTURE 21
Portfolio Compression & Market Practice Changes 21
Collateral 23
Operational Scalability 25
FpML 27

SUPERVISION 29
Accounting 29
Fair Value Accounting 31
EU Savings Tax Directive 32
Financial Law Reform 33
Public Policy - US 35
Public Policy - EU 37
Public Policy - EMEA Emerging Markets 39
Public Policy - APAC 41
Public Policy - Japan 43

EDUCATION & OUTREACH 45

Research 45
Membership 48

Current Members 50
ISDA Conferences & Events 2008 59

iii

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 INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC.
2009 BOARD OF DIRECTORS
Officers
Eraj Shirvani, Chairman Michele Faissola, Vice Chairman
Managing Director, Head of Fixed Income Managing Director and Global Head of
for EMEA Region Rates, Global Markets Division
Credit Suisse Deutsche Bank
Diane Genova, Treasurer
Managing Director and General Counsel,
Investment Bank
J.P. Morgan Chase & Company

Directors

Thibaut de Roux Ted MacDonald

Global Head of Structured Rates and Managing Director and Treasurer
Equity Products The D. E. Shaw group
HSBC Bank plc

Nitin Gulabani Stephen O’Connor

Global Head of Rates Managing Director
Standard Chartered Bank Morgan Stanley

George Handjinicolaou Robert Pickel

Deputy CEO Chief Executive Officer
ISDA ISDA

Alan Haywood Bill Powers

Head of Oil Supply & Trading Managing Director
BP OIL International PIMCO

Peter Healey Riccardo Rebonato

Managing Director Global Head of GBM Market Risk and
UBS Investment Bank Head Analytics
Royal Bank of Scotland

Frédéric Janbon Thomas Riggs

Global Head of Fixed Income Managing Director
BNP Paribas Goldman Sachs

Dixit Joshi Gerhard Seebacher

Managing Director: Head of Equities, Managing Director, Head of Global Credit
EMEA and Asia Pacific Products
Barclays Capital Bank of America

Pierre-Emmanuel Juillard Atsushi Takahashi

Head of Structured Finance Division General Manager of Derivative Products
AXA Investment Managers Division
Mizuho Corporate Bank, Ltd.

Sotaro Kato Lili Wang

Managing Director, Co-Head of Fixed Income Division Senior Executive Vice President
Nomura Securities International, Inc ICBC Ltd.

Eric Litvack
Managing Director, Global COO
Volatility Trading
Société Générale

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 FOREWORD

As you are well aware, 2008 was a year of significant turmoil and volatility in the global financial
markets. Over-extension of, and over-exposure to, subprime credit significantly eroded capital and
confidence in the financial industry. Changes within the industry—in terms of mergers, acquisitions
and failures—occurred at a scope and scale that can only be described as historic.

Through it all, how has the privately negotiated derivatives business fared?

The answer to this question comes in two parts. The first is that the derivatives business—and in par-
ticular the credit default swaps business—functioned very effectively during extremely difficult market
conditions. CDS have proven to be the main (and sometimes only) way for industry participants to
shed risk or express a credit market view. In addition, CDS contracts have been consistently more
liquid than their cash equivalents. While many cash, securities and money markets seized up, the
CDS business continued to operate.

Of particular note is how well the CDS business performed in relation to the several large defaults
that occurred in the span of just a few weeks last autumn. We can take great pride knowing that the
significant amount of time and energy that ISDA and the industry expended to build a robust, resil-
ient infrastructure has clearly been worth the effort. Default and settlement processes were handled
efficiently. In addition, the actual amounts exchanged upon settlement—and the risks of the relevant
CDS positions—were far below reported projections. Figures are available from the Depository Trust
& Clearing Corporation’s Trade Information Warehouse.

The second part of the story, however, is more trying for the industry. Clearly, there is a great deal
of misunderstanding and misperception regarding the role and benefits of CDS. Our focus as the
industry standard-bearer is to address and counter these inaccuracies. For the past 25 years, ISDA
has worked to improve the efficiency and transparency of the bilateral derivatives business, with
continued standardization of documentation, promotion of sound risk management practices and
education of the marketplace.

ISDA’s robust legal and operational infrastructure provides certainty for the derivatives industry in a

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 time of economic volatility. To name but a few of our initiatives: we work with regulators, legisla-
tors and the media to strengthen the operational infrastructure for and understanding of OTC
derivatives that guides market participants through defaults and credit events. We organize
global conferences to promote awareness of industry commitments on operational matters.
We publish Master Confirmation Agreements to harmonize equity derivative transaction and
trade processing.

Recent developments in the financial markets underscore the value of ISDA and the industry’s
collective efforts. Together with its members and other industry groups, ISDA has worked ex-
tensively with a New York Fed-led group of regulators to improve derivative market processing
and scalability, as well as augment risk mitigation and transparency.

One of ISDA’s key initiatives in 2009 is the completion of a successful cash settlement auction-
based mechanism, a process which has been commonly referred to as “hardwiring”. Working
side-by-side with ISDA’s protocol amendment process, the auction mechanism played an im-
portant role in providing market participants an efficient and reliable settlement process through
major credit events in 2008. The incorporation of auction settlement terms into standard CDS
documentation was commended by the Senior Supervisors Group of regulators and separately
by the New York Fed.

ISDA works closely with the industry to improve the OTC processing environment by signifi-
cantly reducing systemic risk and increasing transparency. The Association continues to sup-
port initiatives and platforms that operate to eliminate economically redundant trades through
portfolio compression and tear-ups.

The success of ISDA’s CDS settlement auctions and other strategic steps that ISDA is mak-
ing towards operational efficiency clearly demonstrate that the industry infrastructure for CDS
works.

2008 Year in Review

As we entered 2008, we did so with new leadership. At the Association’s 23rd Annual General
Meeting, ISDA welcomed Eraj Shirvani, Managing Director, Head of European and Pacific
Credit Sales and Trading at Credit Suisse, as its new Chairman. ISDA was very pleased to
have Eraj take on this role to help lead ISDA through the fresh challenges and opportunities
ahead.

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 Eraj replaced Jonathan Moulds, President, Europe, Middle East, Africa (EMEA) and Asia, Bank
of America, who had served as ISDA Chairman since November 2004. We at ISDA deeply
appreciate Jonathan’s leadership and his efforts on behalf of the derivatives industry over the
years.

The past year posed a range of challenging issues for the Association that demonstrated the
commitment of ISDA members, Board and staff around the world. During 2008, ISDA added
100 new members, bringing our total membership to over 820 firms from 57 countries on six
continents. The breadth and scope of ISDA’s membership, coupled with the expertise and tal-
ent its members bring to industry issues, are largely responsible for our continuing success in
representing the global derivatives business.

As ISDA’s Mid-Year 2008 Market Survey highlighted, the derivatives business overall showed
consistent growth over the first half of 2008. However, the industry began to see a downturn in
the notional volumes of credit derivatives—the total amount of trades that are outstanding. This
decrease primarily reflects the industry’s efforts to reduce risk by tearing up economically off-
setting transactions, and demonstrates the industry’s ongoing commitment to reduce risk and
enhance operational efficiency.

ISDA remains focused on building a strong operational infrastructure to support the continued
growth in this important market. The results of this year’s Operations Benchmarking Survey are
of particular interest because of increased attention to such issues from the industry and policy
makers. According to the Survey, post-trade processing has kept pace with industry growth and
in many cases improved over the years.

In the area of documentation, we published a revised version of the (single-name) Standard

Terms Supplement for Use with Credit Derivative Transactions on Leveraged Loans. This tem-
plate has been updated to include auction settlement on the same terms as the index version,
providing consistency for those entering into single-name loan CDS trades on reference obliga-
tions that are listed in the index.

The Collateral Committee worked closely with major dealers to identify improvements in col-
lateral management, including portfolio-reconciliation best practices. The Committee continued
facilitating the use of collateral amongst industry participants, particularly outside of the US. In
Europe, ISDA proposed harmonization of netting laws and in Japan, the 1995 ISDA Credit Sup-
port Annex was revised to reflect changes in legislation.

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 Our 2008 Margin Survey reflected the continued importance of collateralization as a risk mitiga-
tion tool and the effectiveness of collateral agreements. The Survey estimated that the collateral
in circulation was $2.1 trillion, a 60% increase over 2007. The Survey also reported that collateral
agreements in place grew to over 149,000, an 18% increase from 2007.

Year in and year out, ISDA increases the number of netting and collateral opinions in response to
the needs of our members. ISDA currently has 53 netting and 43 collateral opinions, for a total of
96 opinions. We have a steady pipeline of requests for new opinions.

In 2008, ISDA participated in extensive discussions with various groups on risk management
practices. ISDA endorsed the President’s Working Group on Financial Markets’ (PWG) call for
the adoption of best practices with respect to risk management for OTC derivatives activities,
including public reporting, liquidity management, senior management oversight and counterparty
credit risk management. PWG’s initiatives also include the use of legally-enforceable netting and
collateral agreements between counterparties where possible.

Additionally, ISDA, the International Association of Credit Portfolio Managers (IACPM), the Risk
Management Association (RMA) and McKinsey & Company conducted the Survey on Credit
Portfolio Practices. The industry’s interest in the Survey reinforces the importance of strengthen-
ing the portfolio management function during a credit crisis.

Throughout the year, ISDA continued to broaden our educational efforts and reach to industry
participants around the world. We launched ISDA ON DEMAND®, an online service that enables
industry participants to access the Association’s conference programs over the Internet at their
convenience. ISDA ON DEMAND is the only source for e-learning that provides participants with
the relevant ISDA training and educational materials.

2008 was another year of growth for ISDA conferences. In all, ISDA held 143 events throughout
2008. These include our Regional Member Conferences in Sydney, Hong Kong and Tokyo, and
symposiums and training courses on subjects that ranged from risk management and new types
and uses of derivatives to the latest developments across the industry.

The Association’s 2008 Annual General Meeting in Vienna, Austria, which featured leading
speakers from the industry, government and academia, was well attended. ISDA’s April 2009
AGM in Beijing, China will again bring together key players to consider the important role that
derivatives play in the global economy.

ISDA 2009.indd 4 4/8/09 9:57:04 AM

 Looking Ahead

There’s no question that the turmoil in the global financial markets has brought significant chal-
lenges to the privately negotiated derivatives business. We pledge to operate as efficiently and
effectively as possible so that our members realize the maximum value for their contributions to
the Association. Initiatives to reduce or eliminate unnecessary expenses are well underway.

I thank you for your continued involvement in the many initiatives of our Association. With your
support, ISDA will continue to work to fulfill its mission and bring significant value to our industry
and our members.

Sincerely,

Robert Pickel
Executive Director and Chief Executive Officer

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 Documentation
Projects Summary
Key Achievements of 2008, Highlights for 2009

In the challenging macro financial market environment of 2008, the derivatives industry continued to

function well and provide important risk management avenues for market participants. Against this back-

drop, a series of high profile corporations failed and along with that came a number of significant credit

events for ISDA and its members to address. The mechanisms to deal with these events functioned

smoothly and successfully and, contrary to the expectations of some pundits, settlements were com-

pleted efficiently and in smaller amounts than some sensationalized reports indicated.

Credit Derivatives

ISDA conducted 13 settlement auctions over the course of 2008, relating to 8 CDS protocols, notably

including Lehman Brothers, Fannie Mae and Freddie Mac, Washington Mutual and the first European-

based credit event-driven protocols for three Icelandic banks. Each of these auctions was conducted as

seamlessly as those that had preceded them since 2005.

A major part of any credit event process going forward will be the hardwiring of the settlement protocol

process, which facilitates the cash settlement of CDS following a credit event, but which eliminates the

need for individual protocols. This was a major focus in the latter part of 2008 and is perhaps the single

documentation effort to which the Association and its members are currently devoting the most attention

and resources. Hardwiring for new trades is detailed in the Auction Settlement Supplement to the ISDA

Credit Derivatives Definitions. In order to bring existing trades under the same terms, the Big Bang Pro-

tocol lets participants amend trades multilaterally with all other adhering counterparties.

Other key credit derivative projects completed in 2008 include European LCDS, and North American

CDS and LCDS documentation. ISDA expects to revisit its Credit Derivatives Definitions to incorporate

these and other changes in 2009.

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 Close-out Protocol and Netting

The 2009 Close-out Protocol allows firms to agree multilaterally to amend the terms of their documenta-

tion so that in the event of a counterparty failure, the agreed method of determining prices is by Close-

Out Amount. This is a flexible means for market participants to establish reasonable prices by consulting

a range of sources.

In Asia, working toward Close-out Netting for China will be a major focus for the Association, including

proposed amendments to China’s Bankruptcy Act, as well as continued work with regulators on a unified

Master Agreement for onshore derivatives trades. Ongoing work on Close-out Netting for Malaysia will

also continue to be a significant aspect of ISDA’s work in the region.

Equity Derivatives

The AEJ (Asia Ex-Japan) Master Equity Confirmation Agreement, published in August 2008, contains

the following annexes: EFS Annex, which documents cash-settled equity finance share swaps; the Mul-

tiple Exchange Index Annex; and an Open Market Annex OMISO, which documents cash and physical-

ly-settled European and American style index and share options. All of the annexes to this agreement

reference underlying shares or indices in Australia, Hong Kong, New Zealand or Singapore.

Revised Additional Provisions for Use with Indian Underliers were published in November, making

changes to the original version published in 2005. The changes take into account amendments made to

the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations from May.

The 2008 Japanese Master Equity Derivatives Confirmation Agreement is designed to document cash-

settled index option transactions, and cash or physically-settled share option transactions. The 2008

Japanese Dividend Swap Master Confirmation Agreement (Annex IDS) documents index dividend swap

transactions, and is ISDA’s first dividend swap agreement.

The 2008 Americas Master Designated/Exchange-Traded Contract Option Confirmation Agreement,

published in March, is intended to document physically-settled share option transactions and cash-set-

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 tled index option transactions on US underliers.

For 2009, ISDA is working on documentation projects to standardize interdealer share and index swap

documentation for Asia ex-Japan, Europe and Japan, as well as emerging market options documenta-

tion for AEJ closed markets and emerging Europe. Also, we expect to publish share basket and index

basket option documentation for each equity region.

Interest Rate Derivatives

In 2008, along with the publication of numerous Floating Rate Options, including OIS based Floating

Rate Options, ISDA published a confirmation template for CMS One Look Transactions as well as stan-

dard language addressing Deliverable Currency Disruptions. ISDA is working with members to revise

the Deliverable Currency Disruption Fallback Matrix to increase the number of currencies covered.

ISDA will be introducing a standardized biannual process to incorporate new Floating Rate Options in

2009.

Energy, Commodities and Developing Products

ISDA will be working with members to update the Commodity Reference Price sections of the 2005 ISDA

Commodity Definitions as well as expanding the suite of templates for weather transactions. Also ongo-

ing is the expansion of products covered by the ISDA US Emissions Annex.

For the ISDA Global Physical Coal Annex, an updated version of the draft confirmation template is un-

derway. In relation to the ISDA US Crude Oil & Refined Products Annex, a draft addendum for Canadian

transactions is currently under review by local counsel.

The Catastrophe Swap Working Group is finalizing a Wind Event Confirmation for use with the 2006

Definitions. Further natural catastrophe swap documentation compatible with the ISDA framework is

contemplated.

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 Other Areas

The final draft of the widely anticipated Islamic version of the ISDA Master Agreement (ISDA/IIFM

Ta’Hawwut (Hedging) Master Agreement) has been circulated to the IIFM Board of Shariah Scholars for

final approval. A document of cultural and commercial significance, the Islamic Master Agreement will be

the first industry standard document for the framework documentation of privately negotiated derivatives

that complies with Shariah law. Once the Islamic Master Agreement is published, ISDA will start work on

producing individual confirmation forms for specific product use with the framework document.

ISDA acted as an Amicus Curiae—or friend of the court—in several cases during 2008, most notably TCIF

vs CSX, and will continue to provide this resource in any cases that require derivatives industry expertise

and input that any arising court cases might require.

ISDA LEGAL:

David Geen Jing Gu

General Counsel Assistant General Counsel, Asia Pacific
DGeen@isda.org JGu@isda.org

Katherine Darras Rosario Chiarenza

General Counsel, Americas Counsel
KDarras@isda.org RChiarenza@isda.org

Jacqueline Low Kirsty Devonport

Senior Counsel, Asia Pacific Counsel
JLow@isda.org KDevonport@isda.org

Mark New
Assistant General Counsel
MNew@isda.org

ISDA 2009.indd 9 4/8/09 9:57:04 AM

 Now playing...

...on a screen near you

www.isda.org

ISDA 2009.indd 10 4/8/09 9:57:04 AM

 Products & Users
Products & Users

CDS Hardwiring

I
n March 2009, ISDA launched its Auction Settlement Supplement and Protocol, the final stage of

the process known as “hardwiring.” This incorporates auction settlement terms into standard CDS

documentation, and has been welcomed by the Senior Supervisors Group of regulators as well as

by the New York Fed as a tool to reduce uncertainty and make credit event management more opera-

tionally efficient.

The event is a milestone in the ongoing refine- and commitment that both buy-side and sell-side

ment of practices and processes for the efficient, participants and the regulatory community have

liquid and transparent conduct of the CDS busi- invested in this process. Key attributes include:

ness. Hardwiring is central to the many improve- incorporation into the standard documentation

ments ISDA and the industry are making to the of Auction Settlement provisions that eliminate

CDS contract, to further ensure that infrastruc- the need for credit event protocols; Resolutions

ture and standards for these important risk man- of the Determinations Committees, comprising

agement instruments are straightforward, secure dealer and buy-side representatives to deter-

and widely implemented. mine, for example, whether credit events have

taken place; Credit and Succession Event Back-

In recognizing the benefits hardwiring will bring, stop Dates that institute a common standard ef-

we must also recognize the insight, hard work fective date for CDS trades.

11

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 In combination with the changes in market practice that support standard coupons for CDS, these de-

velopments will introduce greater certainty to transactional, operational and risk considerations for treat-

ment of CDS.

CONTACT:

David Geen
General Counsel
DGeen@isda.org

Mark New
Assistant General Counsel
MNew@isda.org

Kirsty Devonport
Counsel
KDevonport@isda.org

Source: Markit Quarterly Trend Report, December 2008

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 Products & Users
Products & Users

Interest Rates

W
orking in conjunction with Association members, ISDA’s legal and documentation activi-

ties in the Interest Rate and Currency Derivatives space covered a range of issues and

regions. We would like to highlight a few of our new publications and how they further the

derivative industry’s objectives.

Additional Provisions For Use With a Deliverable together under the auspices of ISDA, to proac-

Currency Disruption (Additional Provisions) and tively tackle issues that could lead to operational

ISDA Deliverable Currency Disruption Fallback inefficiencies if left unaddressed.

Matrix (Fallback Matrix), were published by ISDA

in November. These address the processing of Responding to member feedback, and in coordi-

a payment stream denominated in a currency nation with the Interest Rate Operations Working

that at the inception of a transaction was convert- Group, ISDA published numerous supplements

ible but has subsequently become inconvertible. to the 2006 ISDA Definitions during 2008. One

ISDA is working with Association members to key development was Exhibit II-J, Additional Pro-

increase the number of currencies covered by visions for a Confirmation of a Constant Maturity

the Additional Provisions and Fallback Matrix on Swaps One Look Transaction. This template il-

a continuing basis. These documents exemplify lustrates ISDA’s continuing efforts to reduce doc-

the commitment of market participants, working umentation risk—a core ISDA objective—by pub-

13

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 lishing standard transaction confirmations. ISDA will continue to work closely with market participants to

identify suitable transactions for standard confirmation templates.

The 2008 Inflation Definitions also reflects ISDA’s global reach and commitment to standardization.

Drawing comments from five continents, the Inflation Definitions greatly expanded the list of available

Index Descriptions. This expanded menu promotes the standardization of inflation trades, by allowing

parties to reference a defined index as opposed to bilaterally defining an index.

CONTACT:

Rosario Chiarenza
Counsel
RChiarenza@isda.org

Source: Markit Quarterly Trend Report, December 2008

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 Products & Users
Products & Users

Natural
Catastrophe Swaps

R
apid product innovation and standardization of product documentation are hallmarks of the

over-the-counter derivatives industry. At last year’s Annual General Meeting in Vienna, Natu-

ral Catastrophe Swaps, particularly US Wind Event and US Earthquake Event Swaps, were

identified as important developing products. Documentation for many of these products begins as be-

spoke derivatives contracts and as the market matures, ISDA works with Association members to forge

standard confirmations.

Drawing Association members from a wide range At the time of publication, the US Wind Event Con-

of backgrounds—for example, re-insurers, deal- firmation was due for finalization. The US Wind

ers and end-users—ISDA formed the Catastro- Event Confirmation project is a fine illustration

phe Swap Working Group to begin working on of how Association members, working through

standardization. The working group decided to ISDA, can transform a relatively bespoke, illiq-

concentrate efforts on developing a standard uid product into a commoditized, liquid product.

US Wind Event confirmation and then expand to Building on the success of the Working Group,

other Natural Catastrophe products. ISDA plans to tackle other Natural Catastrophe

Swaps, including US Earthquake Event confir-

Among the many key points addressed by the mations, in the near term.

Working Group was the length of the period to

determine the occurrence of a loss trigger event CONTACT:

(called the US Wind Event), and appropriate ex- Rosario Chiarenza

tension thresholds. The group has provided a Counsel
RChiarenza@isda.org
menu of possible US Wind Event terms, allowing

for greater customization of the swap, while still

benefitting from standardized documentation.

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ISDA 2009.indd 15 4/8/09 9:57:06 AM

 Products & Users

Derivatives users
committee

I
t is the impetus of customer trades that determines not just where prices go, but which types of

contracts develop. With that in mind, the Derivatives Users Committee remains a vital part of ISDA’s

engagement with the full range of participants in privately negotiated derivative contracts.

ISDA has long recognized the importance of the part of the “hardwiring” of new settlement proce-

buy side in its membership structure, with the dures in credit derivatives.

“Subscriber” category constituting a healthy third

of the total number of member firms. But the As- While these moves clearly underline the role of

sociation went a step further in 2008, adding three investment firms in OTC derivatives, ISDA will

new buy-side positions at Board level, to diversify continue to seek out the views of all constituen-

member representation at senior levels, and to cies within the end-customer base. The use of

better serve the needs of all ISDA members. interest rate swaps and currency derivatives con-

The three new Board members are: tinues to grow and, with government deficits ris-

•P
 ierre-Emmanuel Juillard, Head (and founder) ing, the many national debt management offices

of Structured Finance Division, AXA Investment in ISDA’s membership appear likely to become

Managers more active.

•T
 ed MacDonald, Managing Director, DE Shaw

group CONTACT:

•B
 ill Powers, Managing Director and Member,
Richard Metcalfe
PIMCO Investment Committee. Global Head of Policy
RMetcalfe@isda.org

Separately, the Association has recognised the

end-user contribution to market practice, in the

structure of the Determinations Committee that is

16

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 Products & Users
Products & Users

Equity Derivatives

I
n 2009, ISDA is focusing on standardizing equity derivatives documentation to facilitate electronic

trade processing. ISDA has committed, in various regulatory submissions, to assisting the industry

in its move to electronic trade processing by standardizing the underlying trade documentation. The

current industry commitments for new master confirmation agreements are to be completed by the end

of June 2009.

For Emerging Markets, we are developing stan- est possible degree of uniformity of approach,

dard option terms for transactions referencing which in turn assists processing and automation.

Emerging European and Asia Closed Market

shares and indices. We are also developing stan- Once the June 2009 documentation suite is com-

dard basket option language for generic use in pleted, future projects will be selected according

the four equity regions (US, Europe, Asia ex-Ja- to product volume metrics for non-electronically

pan and Japan) as well as substitution language eligible transactions. One factor in considering a

for use when an extraordinary corporate event new project will be whether standardization of its

occurs. We are completing documentation for the documentation will facilitate electronic trade pro-

interdealer discrete swap business for all regions. cessing. ISDA has also committed to an update of

ISDA remains committed to consistency of lan- the 2002 Equity Derivatives Definitions in 2010.

guage among regions in order to attain the great-

17

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 ISDA continues to sponsor efficient amendments to industry standard documentation via the protocol

process. In February of 2008, ISDA launched the AEJ Equity Protocol. This protocol is multi-functional:

it amends existing trade documentation to provide technical amendments to settlement provisions; it

updates the Additional Representations for use with Indian Underliers; and provides a new market stan-

dard for variance swap market disruption events.

In addition, the Committee continues to be involved in discussions with regulators in both the UK as well

as in Australia regarding the inappropriate disclosure requirements of cash-settled OTC derivatives as

though they were physical positions in shares.

CONTACT:

Katherine Darras
General Counsel, Americas, Head of Equity,
FX and Interest Rates Legal
KDarras@isda.org

Source: Markit Quarterly Trend Report, December 2008

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 Products & Users
Products & Users

Energy,
Commodities &
Developing
Products

A
number of documentation projects are currently underway in the area of energy, commodi-

ties and developing products. In the area of transactions in natural catastrophe and weather

derivatives (see article on Natural Catastrophe Swaps), an ISDA confirmation template for

US wind events will be finalized in early spring. The existing suite of confirmation templates for weather

index transactions has been expanded to include critical cooling and heating degree days, plus total

precipitation.

In physical oil trading, the Canadian Addendum to develop an additional form to cover transactions

the ISDA US Oil Annex will be finalized in spring into non-EU registries, mainly Switzerland, Japan,

to form the ISDA North American Oil Annex. Pre- Australia and New Zealand. The new template,

publication drafts of the confirmation templates to be circulated in April, will include language

to the ISDA Global Physical Coal Annex for for- for operational provisions that are common to all

ward and option transactions were circulated in national registries under the UN Kyoto Protocol,

March. plus country-specific sub-annexes to cover any

domestic exceptions. The existing ISDA US Emis-

Trading emissions allowances is another focus sions Annex has been revised to include carbon

for 2009. Based on the ISDA form for emissions allowance transactions under regional trading

transactions in the EU trading scheme, ISDA will schemes currently operational, such as RGGI.

19

ISDA 2009.indd 19 4/8/09 9:57:08 AM

 An increase in the number of Continental trad- dardized language for letters of credit are also to

ing hubs covered by ISDA European Gas Annex be addressed in 2009, and a project to develop

for physical gas trading is targeted. ISDA is in ISDA templates for commodity index transac-

touch with NAESB about the effects of changes tions is now underway.

proposed by NAESB on the ISDA North Ameri- CONTACT:

can Gas Annex, and the need to develop supple-

Peter Werner
mental ISDA language to that effect. Updating Policy Director
PWerner@isda.org
the ISDA Energy Bridge and developing stan-

Japan Property
Derivatives
A
mid increasing interest, the Japan Property Derivatives Working Group was formed to dis-

cuss the development of the market. It is important for there to be high-quality indices on

which participants feel comfortable to trade, and the Working Group discussed require-

ments for property indices for derivatives transactions. Indices sponsored by IPD and Association

for Real Estate Securitization (ARES) were deemed most suitable. ARES’s index was included in

the Annex A of the 2007 ISDA Property Index Derivatives Definitions published in July 2008.

Documentation is another important element fied in Article 35. It is still unclear, however,

for the growth of the market. The Japan Prop- whether banks can enter into property index

erty Derivatives Documentation Task Force derivatives under the Banking Act. Regulators

was formed to prepare and amend the confir- indicated concerns on the impact on the finan-

mation template for Japanese property index cial strength of banks, as well as the sound-

derivatives. ness of property indices. ISDA will continue

dialogues with the FSA for cross-regulatory

Under the Financial Instruments and Exchange clarifications.

Act (FIEA), property index derivatives would be CONTACT:

considered as “any other business incidental

Tomoko Morita
to the financial instrument business”, as speci- Policy Director & Head of Tokyo Office
TMorita@isda.org

20

ISDA 2009.indd 20 4/8/09 9:57:08 AM

 Infrastructure

Portfolio
Compression &
Market Practice

Infrastructure
Changes

I
SDA and the industry continue in our efforts to strengthen the overall infrastructure of the financial

markets, particularly the credit derivatives market. One such effort, portfolio compression, has fo-

cused on the continued rapid growth in trade volumes and ways to reduce the number of trades

outstanding without modifying the overall risk between parties or the resulting cash flows.

Portfolio compression allows for a reduction in ing is lowered which allows for increased capi-

outstanding trade count and gross notional by tal efficiency—firms can set aside less capital for

replacing portfolios of existing bilateral trades their CDS positions while maintaining the same

which have the same reference entity, restruc- risk profile and cash flows across all counterpar-

turing basis and maturity with two trades of the ties. Depending on how the limits are set, the risk

same reference entity, restructuring basis and profile with a specific counterparty might change,

maturity. if participants allow for that change.

The reduced trade count reduces operational risk Following a selection process under the guid-

at the time of a credit event, as there are fewer ance of the ISDA Credit Steering Committee,

trades to settle. Efficiency is also enhanced as Markit Partners and Creditex were chosen to do

a result of there being fewer trades to maintain the initial rounds of portfolio compression for sin-

and make payments on. Gross notional outstand- gle name trades. These started in August 2008

21

ISDA 2009.indd 21 4/8/09 9:57:08 AM

 and have continued into 2009 on a frequent basis Modified Restructuring credit event, although it

for both North American and European reference will continue to be available for those parties that

entities. In addition to the work being done by want to specifically cover this credit event. These

Markit and Creditex, Trioptima continued its work changes lead to a further standardization of the

on trade reductions in the index space. market and will facilitate the implementation of a

central clearing environment for CDS trades. Dis-

The success of compression both for single name cussions are ongoing for standardization in other

and index trades explains a good portion of the jurisdictions.

reduction in outstanding notional in 2008 from the

previous year’s record.

CONTACT:

On April 8, 2009 the market practice for North

Karel Engelen
America changed the use of fixed coupons of Director and Global Head, Technology Solutions
KEngelen@isda.org
100 bps and 500 bps for single name trades. In

conjunction with this, the compression algorithm

changed as well for 100 bps and 500 bps fixed

coupon trades. At the same time the North Ameri-

can market will no longer trade by default with the

22

ISDA 2009.indd 22 4/8/09 9:57:08 AM

 Infrastructure

Collateral

Infrastructure
T
he last year has been exceptionally productive for ISDA’s Collateral Committee, co-chaired by

Michael Clarke of UBS and Shaun Sheppard of Goldman Sachs. For the first time, commitments

were made to regulators in connection with collateral management. These were reflected in the

July letter issued to regulators by a group of 16 banks, and further outlined in an October follow-up. In

essence, the commitments covered portfolio reconciliation, margin dispute resolution and the production

of a roadmap for the collateral function. The Collateral Committee meets approximately every two weeks

as an update/validation forum. Work in the collateral management area is divided across four Working

Groups roughly corresponding to the regulatory commitments that have been made:

•P
 ortfolio Reconciliation—this group has driven deliver the above-mentioned roadmap in May

process improvement and uptake. All 16 firms 2009. Topics covered include the production

met the target of performing weekly (or bet- of a best practice document, standardization,

ter) reconciliations of all intra-group portfolios electronic communication of margin calls and

of more than 5,000 trades by the end of 2008. interest payments, margin call time frames and

Follow-on targets, both quantitative and qualita- central intermediation of margin calls.

tive, have been agreed upon.

• Dispute Resolution—Analysis of existing meth-

•P
 otential Industry Improvements—this group will odologies will result by end-April in the Group’s

23

ISDA 2009.indd 23 4/8/09 9:57:08 AM

 recommendation for improvements and stan- CONTACT:

dard methodologies in this area.

Julian Day
• Infrastructure—this is the forum for engagement Head of Trading Infrastructure
JDay@isda.org
between the firms and the vendor solution pro-
Nichole Framularo
viders in collateral; it will take forward the build/
Director of Trading Infrastructure
enhancement requirements identified by the NFramularo@isda.org

other groups. Clive Ansell

Director of Trading Infrastructure
CAnsell@isda.org

Jeffrey Kan
Director of Trading Infrastructure
JKan@isda.org

Anna Dunster
Director of Trading Infrastructure
ADunster@isda.org

24

ISDA 2009.indd 24 4/8/09 9:57:09 AM

 Infrastructure

Operational
Scalability

Infrastructure
O
ver the past year, there has been unprecedented activity within the derivatives space. Mar-

ket events have demonstrated that the operational infrastructure works well, but further im-

provements are needed. While scalable OTC derivative processing and infrastructure have

always been fundamental to successful market growth and resiliency, they become even more critical

during stressed markets. Throughout the course of the year, market participants outlined concrete plans

for these improvements, which also enhance risk mitigation.

ISDA co-signed three derivative industry letters The commitments cover all major OTC deriva-

to regulators in March, July and October which tives asset classes as well as look to improve

detailed operational targets, commitments and collateral management practices for these trans-

strategies. ISDA worked in conjunction with the action types. Key targets include:

major dealers and buy-side institutions represent-

ed on the Operations Management Group (OMG) • increased electronic processing of eligible

to present a series of strategic steps to further trades;

strengthen the operational infrastructure for OTC • enhanced trade date confirmation issuance and

derivatives at varying points in time throughout execution;

the lifecycle process. • elimination of material confirmation backlogs;

• risk mitigation for paper trades;

25

ISDA 2009.indd 25 4/8/09 9:57:09 AM

 • s treamlined trade life cycle management; Questions Guide on Credit Derivative Processing

• r eduction in levels of outstanding trades via Standards.

portfolio compression;

• c entral settlement for eligible transactions. As the over-the-counter derivatives industry con-

tinues to improve its post-trade performance ef-

Each of these efforts aims at reducing manual ficiency across a range of metrics, industry im-

intervention and increasing straight-through-pro- plementation groups will continue to work toward

cessing aspects where possible. further automation, confirmation backlog reduc-

tions and increased use of technology to optimize

To continue the operational improvements, mar- efficiency.

ket participants agreed on several fundamental

milestones, including use of central counterpar- CONTACT:

ties for credit derivative transactions, increas-

Julian Day
ing the portion of equity derivatives eligible for Head of Trading Infrastructure
JDay@isda.org
electronic matching, increasing credit deriva-
Nichole Framularo
tive electronic submission timeliness for eligible
Director of Trading Infrastructure
transactions, and developing plans for central NFramularo@isda.org

trade repositories for equity and interest rate de- Clive Ansell
rivatives. Director of Trading Infrastructure
CAnsell@isda.org

Jeffrey Kan
In an effort to advance industry objectives, ISDA
Director of Trading Infrastructure
co-sponsored educational events that provided JKan@isda.org

detailed updates on the commitments and their

Anna Dunster
current states-of-play in New York, London, Director of Trading Infrastructure
ADunster@isda.org
Sydney, Hong Kong and Tokyo. These events

aimed to further the industry’s understanding of

the various operational commitments. Addition-

ally, ISDA jointly published a Frequently Asked

26

ISDA 2009.indd 26 4/8/09 9:57:09 AM

 FINANCIAL PRODUCTS MARKUP LANGUAGE

FpML

F
pML expansion has focused in the areas of commercial loans and financial commodities, with

Infrastructure
work in the physical commodities area soon to come. The existing asset classes have been

updated as well, to reflect ongoing changes in documentation and market practice. The equity

area is a good example of this work.

In 2008, FpML versions 4.3 and 4.4 were pub- try lead to a continuous need to improve and ex-

lished as Recommendations, within the 6-month pand the coverage of the underlying standards.

cycle for minor versions. Version 4.5 became a This standardization and automation will further

Recommendation in March 2009 and the devel- increase the usefulness and importance of FpML

opment of version 4.6 has begun. The next ma- as a technical standard.

jor version (5.0), is moving towards completion.

At this stage, most major architectural changes CONTACT:

have been agreed upon and are implemented in

Karel Engelen
the draft versions. The collateral area has been Director and Global Head, Technology Solutions
KEngelen@isda.org
targeted for further development.

Together with Swift, FIX and ISITC, FpML pub-

lished an industry roadmap to reflect how the

different financial industry standards can fit to-

gether and where their respective strengths lie. It

is available at the Investment Roadmap page on

the FpML site: (http://www.fpml.org/documents/

InvestmentRoadmap_20080411.pdf).

The rapid changes in the OTC derivatives indus-

27

ISDA 2009.indd 27 4/8/09 9:57:09 AM

 FpML ®

Blue Sky Thinking

www.fpml.org
28

ISDA 2009.indd 28 4/8/09 9:57:09 AM

 Risk & Reporting

Accounting

C
hanges to accounting for financial instruments proposed by the Financial Accounting Stan-

dards Board (FASB) and the International Accounting Standards Board (IASB) in 2008 affect-

ed ISDA members around the world. ISDA Accounting Committees were particularly active

in Tokyo, New York and London throughout 2008, consulting with and presenting to regulatory officials.

Key issues in the last year included volatility in the credit and financial markets, fair value measurement,

and global convergence of accounting standards.

Supervision
In Europe, IASB proposed several amendments then amended Statement 133, by requiring ex-

to IAS 39 on hedge accounting and classification panded disclosures about an entity’s derivatives

of financial assets. Of particular importance were and hedging activities.

some fast-tracked proposals on reclassification

of financial assets, and another on embedded FASB and IASB issued an updated Memorandum

derivatives. The Accounting Committee was ac- of Understanding (MOU) describing priorities and

tive in all consultations, and was also involved milestones related to the completion of major

with the FASB proposals to clarify paragraph 14B projects by 2011. IASB board member Stephen

of Statement 133, which discusses whether an Cooper, speaking at ISDA’s Accounting Sympo-

embedded derivative must be separated from its sium in London, said that while the two boards

host contract. FASB’s Statement 161 proposals have made considerable progress in converging

29

ISDA 2009.indd 29 4/8/09 9:57:10 AM

 their sets of standards, progress on other major CONTACT:

projects has been limited. Differences in views

Ed Duncan
about the scope of the projects, and on resolving Director, Head of Risk and Reporting
EDuncan@isda.org
similar issues in active projects, have hampered
Huzefa Deesawala
results. In response, the boards put together a
Head of Finance
team to develop recommendations on moving HDeesawala@isda.org

forward. Antonio Corbi

Assistant Director, Risk and Reporting
ACorbi@isda.org
The Accounting Committee responded to the

IASC Foundation (IASCF) consultation to en-

hance its Constitutional framework. The IASCF is

the legal entity under which IASB operates, and

is governed by a board of 22 Trustees. ISDA par-

ticipated in all roundtables to promote the inde-

pendence of the IASB standards process.

Looking forward, convergence to one set of glob-

al accounting standards is a key initiative in the

years ahead. The SEC proposed a roadmap to-

ward the use of International Financial Reporting

Standards (IFRS) as the global accounting stan-

dard. A transition to IFRS for fiscal years ending

after December 2014 has been proposed.

30

ISDA 2009.indd 30 4/8/09 9:57:10 AM

 Risk & Reporting

Fair Value
Accounting

T
he Securities and Exchange Commission (SEC), IASB and FASB issued guidance clarifying

fair value measurement in 2008. The guidance touched on topics such as modeling assump-

tions when there is no relevant market data, use of broker quotes and distressed sales, and as-

sessment of other-than-temporary impairments. In a related development, FASB proposed amendments

to Statement 157 on how to determine the fair value of a financial asset when markets are inactive.

ISDA’s Accounting Committee was actively involved throughout the consultation process.

ISDA members were selected last year for IASB’s was based on amortizing costs. The delayed re-

Expert Advisory Panel, which issued a report on sponse only worsened the damage.

fair value measurement and disclosures for illiq-

uid instruments. The EAP’s report has become a Policymakers’ recommendations should support

trusted source of educational guidance on both transparency measures. Fair value is one of the

Supervision
sides of the Atlantic. tools to restore investor confidence and resume

normal bank lending behaviour. Refinements in

It seems clear that fair value is on the minds of measuring and reporting profit and losses for fi-

many as we negotiate the current economic tur- nancial instruments that do not trade or trade in

moil, especially as it relates to mark-to-market illiquid markets could be introduced without com-

accounting. Failure to use mark-to-market has promising the core principles of fair value.

caused difficulties before. Large losses made by

banks during the 1973 oil crisis and the 1990s CONTACT:

Japanese banking crisis had their roots in non-

Antonio Corbi
performing mortgage portfolios. In both cases, Assistant Director, Risk and Reporting
ACorbi@isda.org
losses were not recognised (that is, marked to

market) for years since the accounting model

31

ISDA 2009.indd 31 4/8/09 9:57:10 AM

 Risk & Reporting

Eu Savings Tax
Directive

T
he European Union is reviewing the Savings Tax Directive and potentially extending its scope

on principles of better regulation. The aim of the Directive is to exchange information on sav-

ings income in one Member State with other Member States, through financial institutions.

The actual assessment of any associated tax li- The European Commission is also negotiating

ability is purely a matter for the tax administration with certain countries outside the EU, such as

and the beneficial owner since the information Switzerland, Lichtenstein, or the United States,

exchange process is quite distinct from the tax to make them enact equivalent provisions. With-

assessment. The objective is to ensure that citi- out such measures, the purpose of reducing tax

zens of one Member State do not evade taxation evasion is unlikely to be achieved, but would still

by either depositing funds or transacting outside impose a huge cost to Member States’ financial

their jurisdiction of residence, thus distorting the institutions.

single market. Through better regulation the EU

may be also tempted to make taxable, within the CONTACT:

scope of the Directive, more complex structures.

Ed Duncan
However, there are proposed obligations under Director, Head of Risk and Reporting
EDuncan@isda.org
the Directive that have the potential to create
Antonio Corbi
havoc among European financial institutions.
Assistant Director, Risk and Reporting
The first is the operational burden that might ACorbi@isda.org

be imposed due to the information exchange

process and the retrospective application of the

Directive. The second is the scope of the review

and the potential to include other types of debt-

generating obligations that could be character-

ized as income.

32

ISDA 2009.indd 32 4/8/09 9:57:10 AM

 Public Policy

Financial Law
Reform

O
n the international level, several legal reform efforts affect trading in OTC derivatives. In

UNIDROIT (International Institute for the Unification of Private Law), the Convention on Har-

monised Substantive Rules Governing Intermediated Securities has undergone the first of

two phases of adoption by member states. Chapter V of this convention contains key provisions on

collateral arrangements and netting. The final session for adoption is scheduled for October 2009. The

ISDA proposal for a global convention on netting in financial services has been included in the prelimi-

Supervision
nary UNIDROIT work programme for 2009-2011. ISDA has submitted a further draft outline of such a

convention to the Governing Council for final decision in late April 2009.

In the meantime, the European Commission con- and insurance companies), the Settlement Final-

tinues its review of the EFMLG/ISDA proposal for ity Directive, and the Insolvency Regulation.

an EU directive on netting. Several other industry

associations have expressed support for the pro- In the context of UNCITRAL (the United Nations

posal as well. A key aspect of the proposal is the Commission on International Trade Law) ISDA

harmonization of set-off and netting provisions was invited to an expert group of the Financial

across various EU instruments. Some of the in- Markets Law Committee to discuss the effects

struments addressed include the Collateral Direc- of a possible UK adoption of the UN Convention

tive, Winding-up Directives (for credit institutions on Contracts for the International Sale of Goods

33

ISDA 2009.indd 33 4/8/09 9:57:10 AM

 (CISG/Vienna Sales Convention). This treaty is In February 2009 the UK Banking Act introduced

in force in most major jurisdictions in the Ameri- a new netting regime for transactions with Brit-

cas, Europe and Asia. The convention has ef- ish banks and building societies. One of the

fects on physical and financial transactions in main features is the special resolution regime

a range of commodities and commodity deriva- for failing banks and building societies. For the

tives, especially those governed by English law. moment, the previous netting regime remains in

It is widespread practice to exclude the CISG place for transactions with all other types of UK-

from transactions governed under any other law based counterparties. However, it is intended to

(in particular New York law), and recent ISDA extend the new regime to investment firms over

documentation in this area has featured a CISG the summer of 2009.

waiver provision (eg the ISDA US Oil Annex).

Several pieces of secondary legislation entered

On the European Union level, the EU Regulations into force at the same time. Among them is the

on the Law Applicable to Contractual Obligations Restriction of the Partial Property Transfer Order

(the so-called Rome 1 Regulation) and Non-Con- 2009 (Safeguards Order). It aims to protect all

tractual Obligations (Rome 2 Regulation) have transactions commonly included in netting and

entered into force. The Brussels 1 Regulation, on collateral arrangements. Upon publication, ISDA

the Recognition and Enforcement of Judgments made specific proposals to the UK authorities in

in Civil and Commercial Matters, is up for review. order to address some shortcomings that affect

In the context of transactions under English law the contents of any legal opinion involving UK

among counterparties located in EU jurisdictions, banks and building societies. UK authorities in-

all these regulations have an effect on the choice tend to make the clarifications before mid-year.

of law provisions, as well as the choice of forum

clause. In a separate project, ISDA co-chairs a CONTACT:

working group of legal practitioners and academ-

Peter Werner
ics that in March 2009 started discussing the use Policy Director
PWerner@isda.org
of arbitration in financial services, especially de-

rivatives.

34

ISDA 2009.indd 34 4/8/09 9:57:10 AM

 Public Policy

United States

T
he last two years have seen a rapid shift in perceptions about OTC derivatives from public poli-

cymakers in the United States. Up to and immediately after passage of the Commodity Futures

Modernization Act in 2000 (CFMA), the US Congress and regulators were broadly supportive

of the OTC business and recognized the valuable role derivatives play in the economy. Following the

West Coast energy crisis in 2001-02, there was a small but vocal group of policymakers interested in

repealing parts of CFMA, but these efforts were routinely defeated in Congress.

Supervision
Starting in 2007, however, such efforts gained the role of speculation in high commodity prices.

greater support culminating in passage last year After the credit market collapse, derivatives have

of the CFTC Reauthorization Act of 2008. This law come under even greater scrutiny in the US. Cur-

increased regulation and oversight of so-called rent legislative proposals require that all OTC

“significant price discovery contracts,” or OTC derivatives be cleared, give US regulators the

contracts in commodities, which were closely tied power to order OTC participants to liquidate their

to prices on exchange-traded futures contracts. positions, and in some cases even call for an

Passage of the legislation was immediately fol- outright ban on OTC derivatives. Although such

lowed by even greater support for new restric- a ban is unlikely, its proponents form a powerful

tions on OTC activity, particularly with respect to minority in the US policymaking community.

35

ISDA 2009.indd 35 4/8/09 9:57:11 AM

 The outlook suggests that significant change in CONTACT:

the US regulatory approach to OTC derivatives

Greg Zerzan
is likely. What form this change will take is not Counsel and Head of Global Public Policy
GZerzan@isda.org
yet clear, but across both the regulatory and con-

gressional communities there is a consensus that

greater transparency and oversight is required.

36

ISDA 2009.indd 36 4/8/09 9:57:11 AM

 Public Policy

European Union

T
he year 2008 saw considerable EU scrutiny of the role of OTC derivatives in the financial

turmoil. Lehman Brothers’ failure in September motivated the European Commission (EC) to

establish a working group on OTC derivatives in October, with the priority of developing a “Eu-

ropean solution” for central clearing of CDS. Regulators were concerned with perceived systemic risk in

CDS markets, and fearful of insufficient European oversight should a global central counterparty (CCP)

be established outside the EU. Working group discussions faltered in December over dealing firms’

Supervision
preference not to be required to clear their CDS trades in a European clearing house, but by February

2009, nine dealers had agreed to clear trades in an EU-based CCP by end-July.

The working group will now begin looking at the Concerns about CDS combined with the rocky

other types of OTC derivatives, plus issues such start of the working group had prompted proposed

as transparency. ISDA has already contributed to amendments to the Capital Requirements Direc-

a Committee of European Securities Regulators tive (CRD) in the European Parliament, levying

(CESR) consultation on transparency. Informa- punitive capital requirements on CDS trades not

tion gleaned from CCPs and from the Deposi- cleared in a European CCP. These amendments

tory Trust & Clearing Corporation (DTCC) Trade were defeated, though the EP called for a review

Warehouse may prove valuable therein. of OTC derivatives markets (an EC report will be

published end-2009). The Market in Financial In-

37

ISDA 2009.indd 37 4/8/09 9:57:11 AM

 struments Directive (MiFID) is also under review, markets. Policymakers have found no clear link

with derivatives a thematic priority. between non-commercial participation and high

prices, but this issue remains contentious.

This focus on derivatives has led to a delay in

the review of exemptions for commodity firms CONTACT:

from MIFID and CRD. ISDA helped persuade

Richard Metcalfe
policymakers to support later expiry of an exemp- Global Head of Policy
RMetcalfe@isda.org
tion from the CRD (from end-2012 to end-2014),
Roger Cogan
pending this review.
European Policy Director
RCogan@isda.org

ISDA is also busy at EU level defending the role

of non-commercial participants in commodity

38

ISDA 2009.indd 38 4/8/09 9:57:12 AM

 Public Policy

Emea Emerging
Markets

I
n Europe, Poland and Slovakia have become focus countries for ISDA’s work in 2008/2009 with

EU accession countries. In Poland, implementation of the EU Collateral Directive has been delayed

as financial collateral arrangements and securities lending transactions are not yet included in the

scope of nettable transactions under the Bankruptcy Act. This has delayed ISDA in commissioning a col-

lateral opinion on Poland thus far. In Slovakia, issues around the scope of eligible transactions as well

as the range of counterparties eligible to netting and collateral agreements remain problematic despite

Supervision
improvements on the netting front. Also, transactions governed under laws from outside of the EU face

restrictions. In southeastern Europe, ISDA will continue to monitor developments in Croatia and has

started to look into the general legal landscape for derivatives in Bulgaria and Serbia.

Among countries in the CIS region, Russia con- version that was submitted to the Lower House

tinues to be the top priority. It is expected that in late 2007. Additionally, the final version of a

the Russian government will submit its draft bill Russian local master agreement is scheduled for

on netting to the Lower House in April. The main publication in the summer. ISDA is an observer to

regulator provided a rough outline of its ideas the drafting process.

during an event jointly organized by EBRD, ISDA

and three Russian banking associations in late In Ukraine, ISDA is involved in discussions with

2008. This draft bill is meant to replace an earlier local regulators and parliament in order to include

39

ISDA 2009.indd 39 4/8/09 9:57:12 AM

 major amendments to a draft bill on derivatives Discussions on the general legal framework for

which had been initially proposed in 2007. A re- derivatives transactions have also been initiated

vised draft from 2008 is on hold in order to al- with regulators in Qatar.

low for more input from experts. In January 2009,

the Civil Code of Kazakhstan was amended to Africa

include definitions of various derivative instru- In late March, a new draft bill on insolvency

ments. Pursuant to talks with Kazakh regulators, was submitted to parliament in Mauritius. The

ISDA has been requested to provide comments bill includes a chapter drafted by ISDA and en-

on the forthcoming draft bill on netting. dorsed by the local banking association to intro-

duce close-out netting into local law, as well as

Middle East updated conflict of law provisions in the area of

The final draft of the ISDA/IIFM Ta’Hawwut intermediated securities. Updates on the general

(Hedging) Master Agreement, the Islamic ver- legal framework for derivatives in Morocco and

sion of the conventional ISDA Master Agree- Egypt have been circulated to the ISDA CEE/

ment, has been submitted for final approval to EMEA Committee.

the IIFM Board of Shariah Experts. Publication

is expected for mid-2009. Version 1 of this docu- In the context of ISDA’s proposal to UNIDROIT

ment will cover Islamic profit-rate swaps based on a global convention on netting in financial ser-

on commodity Murabaha. ISDA met with regula- vices, initial contacts to regulators in Nigeria have

tors in the United Arab Emirates to discuss the been established, in order to emphasize the need

introduction of the uniform legal regime for de- for legal reform. Recently, regulators have started

rivatives transactions on the federal law level. Of efforts to establish a local swap market.

key concern are general derivatives transactions

issues, and close-out netting in particular. ISDA CONTACT:

has been asked to provide official comments on

Peter Werner
existing regulations issued under the auspices of Policy Director
PWerner@isda.org
various regulators. Currently three different regu-

lators supervise different areas of the markets.

40

ISDA 2009.indd 40 4/8/09 9:57:12 AM

 Public Policy

Asia Pacific

S
ome broad trends and noteworthy themes that have emerged across the APAC region in re-

sponse to the financial crisis. On the positive side, there has not been a “knee-jerk” reaction

by Asian regulators against OTC derivatives. They generally express support for a market

discipline approach to regulation, though this is tempered by a desire to protect individual domestic con-

stituencies from significant financial losses. The concern heard repeatedly throughout the region is that

retail investors and small and medium enterprises alike are entering into complex derivatives transac-

Supervision
tions without understanding the risks or having the sophistication to manage them. However, this has not

led to more regulatory hurdles, except in the retail structured product space, where regulators in Taiwan,

Singapore and Hong Kong have announced plans to review the regulatory framework

Asian regulators have also been following interna- Also of concern are the court cases that have

tional developments such as central counterparty been filed in South Korea and India, especially

clearing (CCP), anti-cyclical regulatory capital re- the Korean cases. In 3 out of 6 cases, the Seoul

quirements and MTM accounting changes. Some District Court has granted payment injunctions

would like to see their own national champions to Korean exporters that had put on (frequently

emerge as the Asian CCP, though rivalries and leveraged) Won KIKO (knock-in, knock-out) op-

lack of economies of scale present challenges to tion trades that have gone against them as the

regional implementation. Won depreciated. Though the Korean Civil Code

41

ISDA 2009.indd 41 4/8/09 9:57:13 AM

 does enshrine the requirements of trust and good In the India cases, interim orders have so far ba-

faith in dealings, the court’s liberal interpretation sically upheld the sanctity of contracts. Neverthe-

of this and the related doctrine of “changed cir- less, ISDA is keeping a close watch on all these

cumstances” means that banks can no longer pending cases.

safely transact on an arm’s length basis with their

counterparties, and that enforceability of legal CONTACT:

contracts is undermined. Indeed, the court’s deci-

Keith Noyes
sions are tantamount to a finding that banks owe Regional Director, Asia Pacific
KNoyes@isda.org
a duty of care to their counterparty and must en-
Jacqueline Low
sure that the transaction is suitable and that the
Senior Counsel, Asia Pacific
counterparty both understands and can manage JLow@isda.org

the risks of the transaction.

42

ISDA 2009.indd 42 4/8/09 9:57:13 AM

 Public Policy

JAPAN

T
hroughout 2008, ISDA continued to provide forums for members to contribute to the develop-

ment of Japan’s privately negotiated derivatives market. Following the market events of late

2008, Japan Credit Derivatives Committee members grew increasingly concerned with media

coverage of the CDS business. To promote an accurate understanding of the business, members pre-

pared and published a Japanese-language FAQ on credit default swaps. The piece covered a range

of topics including product descriptions, market trends, applicable regulations and CDS impact on the

Supervision
financial crisis.

On the equities front, the Variance Swap Work- in March 2009, published by ISDA as a Market

ing Group formed under the Japan Equity Deriva- Practice Statement.

tives Committee continued active discussions on

the circumstances under which exchange-im- ISDA carried on dialogue with Japanese regula-

posed daily price limitations constitute a Market tors on improving the market environment, and

Disruption Event for equity variance swaps. ISDA addressed remaining issues in implementing the

facilitated conference calls for market partici- Financial Instruments and Exchange Act (FIEA).

pants to consider different approaches in promot- FIEA covers the treatment of collateral posted

ing orderly valuation and settlement. As a result, against OTC financial future transactions in light

the Working Group agreed on a set of guidelines of client asset segregation rules. These are situ-

43

ISDA 2009.indd 43 4/8/09 9:57:13 AM

 ations in which the loan and set-off approach in CONTACT:

ISDA’s Collateral Support Documents would not

Tomoko Morita
be appropiate. Policy Director & Head of Tokyo Office
TMorita@isda.org

Kumi Namba
In the new products area, ISDA was involved in
Assistant Director, Policy
the deliberations of the Study Group organized KNamba@isda.org

by the Ministry of Economy, Trade and Industry

on Japan’s emissions trading market. ISDA sub-

mitted comments to the resulting report on practi-

cal issues such as transfer/delivery/settlement of

Kyoto Credits, and valuation methodology.

Accounting standards are increasingly important

for the sound development of the OTC deriva-

tives market. The Japan Accounting Committee

was formed in 2008 to discuss and examine mar-

ket practices, such as hedge fund accounting

rules, fair value measurement and international

convergence of accounting standards.

44

ISDA 2009.indd 44 4/8/09 9:57:13 AM

 Education & Outreach

Research

T
he ISDA Research team supports education and policy activities, primarily by means of semi-

nars and surveys. But 2008 saw the addition of a new initiative: the launch of ISDA Research

Notes, a quarterly publication that discusses public policy issues and market trends related to

OTC derivatives. The first Note, “The ISDA Market Survey: What the results show and what they don’t

show,” appeared in late 2008. It discussed why Market Survey results are a reasonable measure of

market size and growth, but not of risk. The second Note appeared at the start of 2009, and discussed

transaction transparency for OTC derivatives, and why a “one size fits all” model of transparency does

not promote market efficiency.

With regard to education, ISDA Research devel- ISDA Research continues its regular Survey ac-

oped a recurring seminar on Counterparty Credit tivities, which consist of the semi-annual Market

Risk. The new seminar covers measurement and Survey and the annual Margin Survey and Op-

management of the credit risk associated with erations Benchmarking Survey. The Operations

derivatives. In addition to presentations by ISDA Benchmarking Survey underwent significant re-

Education

Research staff, the seminar features a practitioner visions for 2008 in order to achieve consisten-

panel consisting of lawyers and collateral manag- cy with the data contributed by the G16 dealer
Education
Outreach

ers. See www.isda.org for upcoming dates. group. In addition, the Market Survey now dis-

tinguishes between bought and sold protection

& Outreach
&

45

ISDA 2009.indd 45 4/8/09 9:57:14 AM

 in its credit default swap notional amounts. The tions of market standards. One recent effort has

above notional amounts, which total $531.2 tril- been to clarify the compounding conventions

lion across asset classes, are an approximate used in derivative transactions; results are post-

measure of derivatives activity, and reflect both ed on the Trading Practice Committee webpage.

new transactions and existing transactions. The Another has been to work with other industry

amounts, however, are a measure of activity, groups to ensure consistency across documents

not a measure of risk. The Bank for International for varying asset classes.

Settlements (BIS) collects both notional amounts CONTACT:

and market values in its derivatives statistics and

David Mengle
it is possible to use the BIS statistics to determine Head of Research
DMengle@isda.org
the amount at risk in the ISDA survey results.
Anatoli Kuprianov
Director of Technical Analysis
Finally, ISDA Research continues its involvement AKuprianov@isda.org

in clarifying market practice for OTC derivatives, Julia Pachos

with the objective of reducing the number of dis- Research Associate
JPachos@isda.org
putes that might arise from differing interpreta-

46

ISDA 2009.indd 46 4/8/09 9:57:14 AM

 Education &
Outreach

Source: ISDA Research

ISDA 2009.indd 47 4/8/09 9:57:14 AM

 Education & Outreach

Membership

I
n 2008 ISDA welcomed 100 new members. To date ISDA’s membership totals over 820 finan-

cial institutions, government entities, corporations and professional service providers, spanning 57

countries and six continents. ISDA continues to work through its active committees, working groups

and educational efforts to address ongoing industry needs. ISDA’s members are classified into three

categories according to the guidelines contained in its by-laws.

Primary Members – dealer firms provides a forum for these industry participants to

According to the Association’s by-laws, every in- stay abreast of and contribute to important devel-

vestment, merchant or commercial bank or other opments and initiatives.

corporation, partnership or other business orga-

nization that, directly or through an affiliate, as Subscriber Members – end-users

part of its business (whether for its own account ISDA’s Subscriber Membership category is de-

or as agent), deals in derivatives shall be eligible signed for corporations, financial institutions,

for election to membership in the Association government entities and others who use privately

as a Primary Member, provided that no person negotiated derivatives to better manage financial

or entity participates in derivatives transactions risks. Subscriber Membership provides a forum

solely for the purpose of risk hedging or asset or for these industry participants to stay abreast of

liability management. and contribute to important developments and

initiatives.

Associate Members – service providers

ISDA’s Associate Membership category is de- Only ISDA members are entitled to receive the

signed for service providers — brokers, law firms, Association’s legal opinions on the enforceabil-

accounting firms, consulting firms and software ity of the netting provisions of the ISDA Master

providers — who are active in the privately negoti- Agreements. ISDA has obtained netting opinions

ated derivatives business. Associate Membership for 53 jurisdictions. In addition to the netting opin-

48

ISDA 2009.indd 48 4/8/09 9:57:15 AM

 ions, ISDA provides members with legal opinions receive complimentary copies of all new publica-

on the ISDA Credit Support Documents from 43 tions upon their release.

different jurisdictions.

Only ISDA members are eligible to attend the As-

Only ISDA members are able to participate in the sociation’s Annual General Meeting, which is the

Association’s numerous Committees, Working industry’s preeminent forum for the discussion of

Groups and Task Forces, which serve to address developments and issues in the privately negoti-

issues in the rapidly evolving derivatives market. ated derivatives business.

ISDA members exclusively receive the numer- In addition, a strong preference is given to en-

ous policy papers, response letters, market sur- listing speakers from ISDA member firms at the

vey data and communications on key business Association’s numerous conferences and semi-

issues that the Association and its consultants nars.

generate.

CONTACT:

ISDA members receive substantial discounts

Liz Zazzera
when ordering copies of the Master Agreement Director of Conferences & Membership
Education &

LZazzera@isda.org
Outreach

and supporting documents published by the As-

sociation. Primary Contacts at member firms

ISDA 2009.indd 49 4/8/09 9:57:15 AM

 ISDA PRIMARY MEMBERS
Abbey National Plc Bayerische Hypo-und Vereinsbank AG (HVB)
ABSA Bank Ltd. Bayerische Landesbank
Abu Dhabi Commercial Bank BHF Bank (Berliner Handels-und Frankfurter)
Accord Energy Limited BNP Paribas
Agricultural Bank of China BP Plc
Allied Irish Banks, plc Branch Banking and Trust Company (BB&T)
American International Group, Inc. BRE BANK SA
American International Group, Inc. BSI SA
AmInvestment Bank Bhd Caixa d’ Estalvis i Pensions de Barcelona “la
Andorra Banc Agricol Reig, S.A. (ANDBANC) Caixa”
Aozora Bank Caja De Ahorros De Galicia
Assured Guaranty Corp. Caja de Ahorros Y Monte de Piedad de Madrid
Australia and New Zealand Banking Group, Calyon Corporation
Limited Cargill, Incorporated
Axis Bank Ltd. Carnegie Investment Bank AB
Banca Akros Spa Ceská sporitelna, a.s.
Banca Aletti & C. S.p.A. (Gruppo Banco China CITIC Bank
Popolare di Verona e Novara) China Construction Bank
Banca d’Intermediazione Mobiliare IMI S.p.A. China Development Financial Holding Corpora-
BANCA INTERMOBILIARE SpA tion
Banca Monte Dei Paschi Di Siena SpA Chinatrust Commercial Bank
Banca Popolare di Milano scarl Chuo Mitsui Trust & Banking Co. Ltd.
Banca Popolare di Vicenza CIBC World Markets Inc.
Banca Profilo, S.p.A. Citigroup
Banco Bilbao Vizcaya Argentaria, S.A. Commerce International Merchant Bankers
Banco BPI, S.A. Berhad
Banco Bradesco S.A. Commerzbank AG
Banco Comercial Portugues S.A. Commonwealth Bank of Australia
Banco Espanol de Credito, S.A. (BANESTO) Confederacion Espanola de Caja de Ahorros
Banco Espírito Santo S.A. ConocoPhillips
Banco Itaú S/A Coral Energy, L.P.
Banco Popular Espanol Credit Industriel et Commercial (CIC)
Banco Votorantim S/A - Nassau Branch Credit Suisse
Bank BPH SA Daiwa Securities SMBC Co. Ltd.
Bank Hapoalim B.M. Danske Bank A/S
Bank Julius Baer & Co. Ltd. DBS BANK LTD
Bank Leumi le-Israel B.M. DEPFA BANK plc
Bank of America N.A. Deutsche Bank AG
Bank of Beijing Co., Ltd Dexia Bank Belgium S.A.
Bank of China DnB NOR Bank ASA
Bank of Ireland Global Markets Dresdner Bank AG
Bank of Montreal DZ BANK AG Deutsche Zentral-Genossenschafts-
The Bank of New York Mellon bank
Bank of Ningbo Co., Ltd E.Sun Commercial Bank, Ltd.
Bank of Nova Scotia EDF Trading Limited
Bank of Scotland plc, Treasury EFG Eurobank Ergasias S.A.
Bank of Shanghai Co., Ltd. EFG International
Bank Vontobel AG Erste Bank Group AG
Bankthai Public Company Limited Europe Arab Bank plc
Banque Degroof SA F. van Lanschot Bankiers N.V.
Barclays Capital The First International Bank of Israel Ltd.

50

ISDA 2009.indd 50 4/8/09 9:57:15 AM

 ISDA PRIMARY MEMBERS
FirstRand Bank Limited National City Bank
Fortis Bank NV/SA NATIXIS
GASELYS Nedbank Limited
Generali SGR S.p.A. NIBC
Goldman Sachs & Co. Nomura Securities Co., Ltd.
Gulf International Bank (UK) Limited Norddeutsche Landesbank Girozentrale
Hamburger Sparkasse Nordea Bank Finland Plc
Hang Seng Bank Limited Norinchukin Bank
HDFC Bank Limited nv Nuon Energy Trade & Wholesale
Hess Energy Trading Company, LLC Nykredit Bank A/S
HSBC Holdings plc Osterreichische Volksbanken-Aktiengesellschaft
HSH Nordbank AG Oversea-Chinese Banking Corporation Limited
Hydro-Quebec Piraeus Bank S.A.
ICICI Bank Limited PNC Bank, N.A.
IKB Deutsche Industriebank AG Pohjola Bank plc
Industrial and Commercial Bank of China Rabobank Nederland
Industrial Bank Co., Ltd. Raiffeisen Zentralbank Austria AG
Industrial Bank of Korea Regions Bank
ING Bank N.V. Renaissance Capital
Intesa Sanpaolo SpA Resona Bank, Ltd.
Investec Bank Limited Royal Bank of Canada
Irish Life & Permanent plc The Royal Bank of Scotland plc
J.P. Morgan Chase & Co. RWE Supply & Trading GmbH
Jefferies Group, Inc Sal. Oppenheim jr. & Cie KGaA
JSC Halyk Bank Samsung Securities Co., Ltd.
Jyske Bank A/S Santander Central Hispano, S.A.
KASIKORNBANK Public Company Limited Shanghai Pudong Development Bank
KBC Bank Shinko Securities Co., Ltd.
KeyCorp Shinsei Bank, Limited
Koch Supply & Trading, LP Shoko Chukin Bank
Komercní banka, a.s. Skandinaviska Enskilda Banken
Kookmin Bank SMBC Capital Markets, Inc.
The Korea Development Bank Societe Generale
Korea Exchange Bank The Standard Bank of South Africa
Kotak Mahindra Bank Ltd. Standard Chartered Bank
Landesbank Baden-Württemberg STASCO
Landesbank Hessen - Thueringen Girozentrale State Bank of India
Lloyds TSB Bank plc State Street Bank & Trust Company
Macquarie Bank Limited Sumitomo Mitsui Banking Corporation
Maple Bank GmbH Sumitomo Trust and Banking Co., Ltd.
Meliorbanca S.p.A. Suncorp-Metway Limited
Mitsubishi UFJ Financial Group (MUFG) SunTrust Robinson Humphrey Capital Markets
Mitsui & Co., Ltd. Svenska Handelsbanken (Handelsbanken
Mizrahi Tefahot Bank Ltd. Markets)
Mizuho Financial Group Swedbank AB
Morgan Stanley & Co. International plc Swiss Re Financial Products
National Australia Bank Limited Sydbank A/S
National Bank of Abu Dhabi Taishin International Bank
National Bank of Canada The Toronto-Dominion Bank
National Bank of Greece Totsa Total Oil Trading S.A.
National Bank Trust Troika Dialog

New Members appear in italics

51

ISDA 2009.indd 51 4/8/09 9:57:15 AM

 ISDA PRIMARY MEMBERS
Turkiye Garanti Bankasi A.S. Wachovia Corporation
UBS AG Wells Fargo Bank
Union Bank of India Westdeutsche Genossenschafts-Zentralbank eG
United Bank Limited WestLB AG
United Overseas Bank Limited Westpac Banking Corporation
VTB Bank Europe plc XL America, Inc.
Zurcher Kantonalbank

Total Primary Members: 210

ISDA ASSOCIATE MEMBERS

A & L Goodbody Bloomberg Financial Markets
Abreu Advogados BM&F - Bolsa de Mercadorias & Futuros
Addleshaw Goddard Bond Exchange of South Africa
Advokatfirman Hammarskiöld & Co. Borden Ladner Gervais, LLP
Advokatfirman Vinge KB Bowman Gilfillan Inc.
Aird & Berlis LLP Bracewell & Giuliani LLP
Akin, Gump, Strauss, Hauer & Feld LLP Brown Rudnick Berlack Israels LLP
Algorithmics, Inc. Brzobohaty Broz & Honsa v.o.s.
Ali Budiardjo, Nugroho, Reksodiputro (ABNR) Buck Consultants, LLC
Allen & Overy LLP Buddle Findlay
Allens Arthur Robinson Bulboaca & Asociatii SCA
Allustra Limited Cadwalader, Wickersham & Taft
Alston & Bird LLP Cameron McKenna
Amarchand & Mangaldas & Suresh A. Shroff Cardigos e Associados - Sociedade de Advoga-
& Co. dos RL
Anderson Mori & Tomotsune Caspi & Co.
Appleby CETIP - Câmara de Custódia e Liquidação
APYDOS SA Chadbourne & Parke LLP
Arendt & Medernach Chambers of Sir Hamid Moollan Q.C.
Arthur Cox Solicitors Chatham Financial Corp.
Ashurst Chicago Board Options Exchange
Atsumi & Partners Chiomenti Studio Legale
AZB & Partners City-Yuwa Partners
Baker & McKenzie LLP Clayton Utz
Baker Botts L.L.P. The Clearing Corporation
Bär & Karrer The Clearing Corporation of India Ltd.
Bech-Bruun Cleary, Gottlieb, Steen & Hamilton LLP
Bell Gully Clifford Chance LLP
Berwin Leighton Paisner CLS Services Limited
BGC Brokers LP Clyde & Co.
Binder Grosswang Rechtsanwalte CME Group Inc.
Bingham McCutchen LLP Conyers Dill and Pearman
Bird & Bird Copp Clark Professional
Blackbird Holdings, Inc. Corrs Chambers Westgarth
Blake Dawson Covington & Burling LLP
Blake, Cassels & Graydon LLP Cravath, Swaine & Moore LLP

52

ISDA 2009.indd 52 4/8/09 9:57:15 AM

 ISDA ASSOCIATE MEMBERS
Creditex Group Inc. Harry Jho LLC
CreditSights, Inc. Herbert Smith
Cuatrecasas Abogados, S.R.L. Herguner Bilgen Ozeke
Curtis, Mallet-Prevost, Colt & Mosle LLP Holman Fenwick & Willan
D. Harris & Co. International Ltd Homburger
Dave & Girish & Co. Houthoff Buruma
DAVID DOBLE Solicitors Hughes Hubbard & Reed
Davies Ward Phillips & Vineberg Hunton & Williams
Davis Polk & Wardwell IBM Corporation
De Brauw Blackstone Westbroek ICAP
De Pardieu Brocas Maffei Interactive Data Corporation
Debevoise & Plimpton LLP IntercontinentalExchange, Inc.
Dechert LLP Japan Credit Rating Agency, Ltd
Denton Wilde Sapte Jermyn Capital Partners PLC
The Depository Trust & Clearing Company Johnson Winter & Slattery
Dewey & LeBoeuf Jones Day
Dillon Eustace JunZeJun Law Offices
DLA Piper Juris Corp
DNC Advocates At Work Karatzas & Partners
Dominion Bond Rating Service Limited Katten Muchin Rosenman
Donaldson Legal Consulting Kaye Scholer LLP
eClerx Kim & Chang
EMC Document Sciences King & Spalding LLP
Ernst & Young LLP King & Wood
Eurex Clearing AG Kirkland & Ellis
Euroclear SA/NV Kirkpatrick & Lockhart Preston Gates Ellis LLP
EVERSHEDS LLP Kramer Levin Naftalis & Frankel LLP
Faegre & Benson LLP Kromann Reumert
Field Fisher Waterhouse LLP Kutak Rock LLP
Fitch Ratings Inc. L. Morris Legal
Foley & Lardner LLP Landwell
Freehills Latham & Watkins
Freshfields Bruckhaus Deringer LCH.Clearnet Limited
Fried, Frank, Harris, Shriver and Jacobson Lee & Ko
Ganado & Associates Advocates Lee & Li
Gernandt & Danielsson Advokatbyrå KB Lenz & Staehelin
GFI Group Linklaters Allen & Gledhill Pte Ltd
Gibson, Dunn & Crutcher LLP Linklaters LLP
Gide Loyrette Nouel Lombard Risk Systems Ltd.
Global Electronic Markets LLC London International Financial Futures and
GlobeOp Financial Services Options
Goodmans LLP Exchange (LIFFE)
Goodwin Procter LLP Lovells LLP
Gorrissen Federspiel Kierkegaard Lowenstein Sandler PC
Gowling Lafleur Henderson LLP Loyens & Loeff
Grech Vella Tortell & Hyzler-Advocates Mallesons Stephen Jaques
Greenberg Traurig, LLP Mannheimer Swartling Advokatbyra AB
Gross, Kleinhendler, Hodak, Halevy, Maples and Calder
Greenberg & Co. Marex Financial Limited
Hahn & Hessen LLP MarketAxess
Harney Westwood & Riegels Markit Group Limited

53

ISDA 2009.indd 53 4/8/09 9:57:15 AM

 ISDA ASSOCIATE MEMBERS
Marval O’Farrell & Mairal PricewaterhouseCoopers
Matheson Ormsby Prentice Progress Software
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Purrington Moody Weil LLP
Advogados Quick Corp.
Mayer Brown LLP Radar Logic Incorporated
McCann FitzGerald Rating and Investment Information, Inc.
McCarthy Tétrault LLP Reed Smith LLP
McClure Naismith Reuters
McDermott Will & Emery LLP Richards Kibbe & Orbe LLP
McKee Nelson LLP Ritch Mueller, S.C.
McMillan Binch Rojs, Peljhan, Prelesnik & Partners
Meitar Liquornik Geva & Leshem Brandwein Ropes & Gray
Meyer Lustenberger Attorneys-at-Law S.W.I.F.T. sc
MF Global UK Limited Salans LLP
Milbank, Tweed, Hadley & McCloy Sapient
Misys Banking Systems Schiff Hardin LLP
Mitsui Company SCHOENHERR RECHTSANWAELTE GMBH
Moody’s Investors Service, Inc. Schulte Roth & Zabel LLP
Moore & Van Allen PLLC Scrittura, Inc.
Morgan, Lewis & Bockius Seward & Kissel LLP
Mori Hamada & Matsumoto Shearman & Sterling LLP
Morrison & Foerster LLP Shearn Delamore & Co.
Munsch Hardt Kopf & Harr, P.C. Shin & Kim
Nagashima Ohno & Tsunematsu Sidley Austin LLP
NautaDutilh Simmons & Simmons
NetDelta LLC Simpson Thacher & Bartlett
Newedge Group Singapore Exchange Limited
Nishimura & Asahi SJ Berwin
Nord Pool ASA Skadden, Arps, Slate, Meagher & Flom
Norton Rose LLP Slaughter and May
Novarum Risk Management UK Limited Soltysinski, Kawecki & Szlezak
NS Solutions Corporation Sonnenschein Nath & Rosenthal LLP
NTT Data Corporation Standard & Poor’s
O’Melveny & Myers LLP Stikeman Elliott LLP
ODL Securities Limited Stroock & Stroock & Lavan LLP
Oesa Limited Sullivan & Cromwell
Ogier SunGard Data Systems Inc.
Ogilvy Renault Sutherland, Asbill & Brennan LLP
Oh-Ebashi LPC & Partners Taylor Wessing
Olswang Teigland-Hunt & Associates LLP
Omgeo Thompson Hine LLP
Orrick, Herrington & Sutcliffe LLP Thunderhead Ltd.
Osler, Hoskin & Harcourt LLP TMI Associates
Patton Boggs LLP Tokyo Financial Exchange (TFX)
Paul, Weiss, Rifkind, Wharton & Garrison LLP Tokyo Stock Exchange Group, Inc.
Pekin & Pekin Tradeweb Markets LLC
Peltonen, Ruokonen & Itainen Oy Tradition (North America), Inc.
Pillsbury Winthrop Shaw Pittman LLP Travers Smith
Pinheiro Neto - Advogados TriOptima
Pinsent Masons Troutman Sanders, LLP
Plesner Svane Grønborg, Law Firm Tullett Prebon

54

ISDA 2009.indd 54 4/8/09 9:57:15 AM

 ISDA ASSOCIATE MEMBERS
Uria Menendez Abogados, S.L.P.
Ustariz & Abogados Estudio Jurídico
Versif INC
Vinson and Elkins L.L.P.
VOB-Service GmbH
Vyapar Capital Market Partners LLC
Walder Wyss & Partners
Weil Gotshal & Manges
WFW Global LLP
White & Case LLP
ISDA SUBSCRIBER MEMBERS
Aareal Bank AG
AB Svensk Exportkredit
ADI Alternative Investments
AEGON USA Investment Management, LLC
African Development Bank
AGF Asset Management
Aladdin Capital Management LLC
Alberta Treasury Branches (ATB Financial)
Alexandra Investment Management, LLC
Alliance Capital Management L.P.
Allstate Investments, LLC
Ambac Financial Group, Inc.
American Electric Power Service Corporation
American Express Company
American Honda Finance Corporation
Ameriprise Financial, Inc.
AMVESCAP plc
Anchorage Advisors, L.L.C.
Ares Management LLC
Artradis Fund Management Pte Ltd
Asian Development Bank
Athilon Structured Investment Advisors, LLC
Austrian Federal Financing Agency (AFFA)
Aviva Investors Global Services Limited
AXA BANK EUROPA SA
AXA Investment Managers
B. Metzler seel Sohn & Co. KGaA
Babcock & Brown
Baillie Gifford & Co.
Banco de Portugal
Bank for International Settlements
Bank Nederlandse Gemeenten, nv
Bank of Canada
ISDA 2009.indd 55
Willkie, Farr & Gallagher LLP
WilmerHale
Winston & Strawn LLP
Wistrand Advokatbyra
WOLF THEISS Rechtsanwälte GmbH
Womble Carlyle Sandridge & Rice, PLLC
Wong Partnership
Yigal Arnon & Co.
Yulchon
Zaid Ibrahim & Co.
Total ASSOCIATE Members: 290
Bank of England
The Bank of Fukuoka, Limited
The Bank of Kyoto, Ltd.
Bank of Lithuania
Banque De France
Banque et Caisse d’Epargne de l’Etat,
Luxembourg
The Baupost Group, L.L.C.
BBT Fund L.P.
Beijing Gao Hua Securities Company Limited
BG Group Plc
BlackRock Financial Management
BlueCrest Capital Management LLP
BlueMountain Capital Management, LP
Bradford & Bingley plc
Brevan Howard Asset Management LLP
Bridgewater Associates, Inc.
British Energy Trading and Sales Limited
Brown Brothers Harriman & Co.
Bunge SA
Business Development Bank of Canada
Cairn Financial Products Limited
Caisse Centrale Desjardins
Caisse de depot et Placement du Quebec
Caisse des Dépôts
California Department of Water Resources -
Electric Power Fund
California State Teachers’ Retirement System
(CalSTRS)
Canada Mortgage and Housing Corporation
Canada Pension Plan Investment Board
Canyon Capital Advisors LLC
Capital Group International, Inc.
 55
4/8/09 9:57:15 AM
 ISDA SUBSCRIBER MEMBERS
Capital One Financial Corp.
Cassa Depositi e Prestiti S.p.A.
Central Bank of the Russian Federation (Bank
of Russia)
Channel Capital Advisors LLP
Chevron Corporation
Cheyne Capital Management (UK) LLP
China Development Bank
Citadel Investment Group, L.L.C.
Co-Operative Financial Services Limited
Cobelfret SA
Conectiv Energy Supply, Inc.
Convexity Capital Management LP
COREALCREDIT BANK AG
Council of Europe Development Bank
Countrywide Financial Corporation
CQS (UK) LLP
D.E. Shaw & Co., L.P.
DekaBank Deutsche Girozentrale
Depfa Deutsche Pfandbrief Bank AG
Deutsche Postbank AG
DKR Capital Inc.
Drax Power Limited
DTE Energy Trading, Inc.
Dunbar Bank Plc
Dutch State Treasury Agency
E.ON Energy Trading AG
EADS NV
Eksportfinans ASA
Electrabel NV/SA
Electricite de France
Elektrizitaets-Gesellschaft Laufenburg AG
(EGL AG)
Ellington Management Group, L.L.C.
Endesa Italia SpA
Endesa, S.A.
Enel SPA
Energie Ouest Suisse (EOS)
Eni S.p.A.
Eskom Holdings Limited
Essent Energy Trading B.V.
Eton Park Capital Management, L.P.
EUROFIMA
European Bank for Reconstruction &
Development
European Investment Bank
Export Credits Guarantee Department
Export Development Canada
The Export-Import Bank of China
F&C Management Limited
Fairfax Financial Holdings Limited
Federal Home Loan Bank of Atlanta
Federal Home Loan Bank of Boston
Federal Home Loan Bank of Chicago
Federal Home Loan Bank of Cincinnati
Federal Home Loan Bank of Dallas
Federal Home Loan Bank of Des Moines
Federal Home Loan Bank of Indianapolis
Federal Home Loan Bank of New York
Federal Home Loan Bank of Pittsburgh
Federal Home Loan Bank of San Francisco
Federal Home Loan Bank of Seattle
Federal Home Loan Bank of Topeka
Federal Home Loan Mortgage Corporation
(Freddie Mac)
Federal National Mortgage Association
(Fannie Mae)
Fidelity Investments Money Management, Inc.
Fifth Third Bank
FIL Limited
Florida State Board of Administration
FMC Corporation
Fonds de Réserve pour les Retraites
Ford Motor Credit Company
Friesland Bank N.V.
Gas Natural sdg, S.A.
Gazprom Marketing & Trading Ltd
General Electric Capital Corporation
General Re Financial Products Corp.
Genworth Financial
Glencore International AG
GLG PARTNERS LP
Gordian Knot Limited
Government Debt Management Agency Private
Company Limited by Shares (Hungary)
Government of Canada, Department of Finance
Government of Singapore Investment Corpora-
tion
Pte Ltd
Greywolf Capital Management, LP
Gunvor International BV, Amsterdam, Geneva
Harvard Management Company, Inc.
HBK Services LLC
Henderson Global Investors Limited
Highbridge Capital Management, LLC
Howard Hughes Medical Institute
Hypo Alpe-Adria Bank International AG
III Offshore Advisors
Indian Oil Corporation, Limited
Instituto de Credito Oficial
Instituto de Gestao de Credito Publico
Int’l Bank for Reconstruction (World Bank)

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 ISDA SUBSCRIBER MEMBERS
Intel Corporation
Inter-American Development Bank
International Finance Corporation
Ionic Capital Management LLC
IXIS Asset Management
J&S Group Limited
J. R. Simplot Company
Japan Post Bank Co., Ltd.
John Hancock Financial Services
The Joyo Bank, Ltd.
The Juroku Bank Ltd
KAS Derivaten Clearing N.V.
KfW
King Street Capital Management, L.P.
Kingdom of Belgium
Kingdom of Denmark
Kingdom of Sweden
Kommunalbanken AS
Kommunalkredit Austria AG
KommuneKredit
Kommuninvest i Sverige AB (publ)
Landesbank Berlin AG
Landesbank Saar
Landeskreditbank Baden-Wuerttemberg -
Foerderbank
Landwirtschaftliche Rentenbank
Laurentian Bank of Canada
Legal and General Investment Management
(Holdings) Ltd.
LIM Advisors Limited
Lombard Odier Darier Hentsch & Cie
Louis Dreyfus Corporation
Louis Dreyfus Energy Services L.P.
M & G Investment Management Limited
M/S Bharat Petroleum Corporation Limited
(BPCL)
Magnetar Capital LLC
Man Investments Ltd
Mandatum Life Insurance Company Limited
Massachusetts Mutual Life Insurance Company
MBIA Insurance Corp
McDonald’s Corporation
MetLife
MFS Investment Management
Millennium Partners, L.P.
Mitsubishi Corporation
Mitsui Sumitomo Insurance Company Limited
MKP Capital Management, LLC
MN Services N.V.
Moore Capital Management LLC
Munich Re Capital Markets GmbH
ISDA 2009.indd 57
Municipality Finance Plc
National Bank of Poland
National Rural Utilities Cooperative Finance
Corporation
National Swedish Pension Fund
Nationwide Building Society
Natixis Commodity Markets Limited
Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. (“FMO”)
Nederlandse Waterschapsbank N.V.
New South Wales Treasury Corporation
New Zealand Debt Management Office
Newshore Financial Services Inc.
Nexen Inc.
Nordic Investment Bank
Norges Bank
Northern Trust
Novartis International AG
NRW.BANK
OFI ASSET MANAGEMENT
OGE Energy Resources, Inc.
Ontario Financing Authority
Ontario Teachers’ Pension Plan Board
Opet Trade (Singapore) Pte. Ltd
Øresundsbro Konsortiet
OZ Management, L.L.C.
Pacific Investment Management Company LLC
Pacific Life Insurance Company
Paloma Partners Management Company
Paulson & Co. Inc
Perfect Treasure Investment Limited
Pershing Square Capital Management, L.P.
Peugeot SA
Pfizer Inc.
PGGM
Pioneer Investment Management Limited
Portland General Electric
Primus Asset Management, Inc.
ProLiance Energy LLC
Province of British Columbia
Prudential Global Funding LLC
PSEG Energy Resources & Trade LLC
PSolve Asset Solutions
Public Sector Pension Investment Board
Putnam Investments
Quadrant Structured Investment Advisers LLC
(QSI)
Québec
Queensland Investment Corporation
Queensland Treasury Corporation
QVT Financial LP
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 ISDA SUBSCRIBER MEMBERS
Raiffeisen Switzerland Genossenschaft
Regiment Capital Management, LLC
Reliance Industries Limited
Renault SAS
Republic of Finland
Reserve Bank of New Zealand
S.A.C. Capital Advisors, L.P.
Sandelman Partners, L.P.
Sanofi-Aventis
Saracen Energy Advisors LP
Saxo Bank A/S
Schroders plc
ScottishPower Energy Management Limited
Shell Asset Management Company B.V.
(SAMCo)
Shinkin Central Bank
Siemens Aktiengesellschaft
Sierra Pacific Resources
Sinopec (Hong Kong) Petroleum Company
Limited
SK Energy Co., Ltd.
SNCB Holding
SNS Bank N.V.
Sompo Japan Insurance Inc.
Soros Fund Management LLC
Sound Capital Management, Inc.
South African Reserve Bank
Southwest Gas Corporation
Sparkasse KoelnBonn
Standard Life Investments Limited
Stark Investments
StatoilHydro ASA
Stevens Capital Management LP
Stichting Pensioenfonds ABP
Stone Tower Capital
Student Loan Marketing Association
(Sallie Mae)
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SUEK AG
Suez Energy Marketing NA, Inc.
Suez-Tractebel S.A.
Sumitomo Corporation
Sun Life Assurance Company of Canada
Susquehanna Financial Products
Sveriges Riksbank
Swedish Housing Finance Corp.
Swiss National Bank
Taconic Capital Advisors L.P.
Telecom Italia SpA
Telkom SA Limited
Temasek Holdings (Private) Limited
Total Capital S.A.
Toyota Financial Services
TPG-Axon Capital Management, LP
Trafigura Derivatives Limited
TransCanada Pipelines Limited
Transnet Limited
Treasury Corporation of Victoria
Tudor Investment Corporation
U.S. Bancorp
Union Bank of California, N.A.
University of Notre Dame
The Vanguard Group, Inc
Vattenfall A.B.
Vitol SA
Vodafone Group Services Ltd.
Volvo Treasury AB
Webster Bank
Wellington Management Company, LLP
Western Australian Treasury Corporation
Western Bulk Carriers KS
Westfield Holdings Limited
Weyerhaeuser Asset Management LLC
Whitebox Advisors, LLC
Yorkshire Building Society
Total SUBSCRIBER Members: 324
TOTAL ISDA MEMBERS 824
4/8/09 9:57:15 AM
 ISDA Conferences & Events 2008
2006 ISDA Definitions – ISDA Symposium Ethics Issues Confronting Lawyers in the
Financial Services Industry – ISDA Symposium
2008 ISDA Regional Conference
Extending FpML –Advanced Training Course
A Primer on Documenting Non-Deliverable
Forwards, Options & Swaps – ISDA and EMTA FpML Training Course
Symposium
Fundamentals of Commodity Derivatives
Close-Outs and the Impact of Market Events – Seminar
ISDA Workshop
Fundamentals of Credit Derivatives Seminar
Counterparty Credit Risk Seminar
Fundamentals of Derivatives Seminar
Covered Bonds and their Documentation – ISDA
Symposium Fundamentals of Equity Derivatives Seminar

Credit Considerations in Equity Derivatives & How to Read ISDA Netting Opinions – ISDA
Related Hedging Transactions – ISDA Symposium Symposium

Credit Derivatives Operations Training Course Introduction to Operations Training Course

Credit Derivatives Workshop ISDA Operations Commitments, Solutions and

Documenting and Confirming Credit Derivative
Transactions Conference
Documenting and Confirming Equity Derivative
Transactions Conference
Beyond – ISDA Symposium
Latest Developments in Accounting for Financial
Instruments
Litigation in the OTC Derivatives Market

Documenting and Confirming Exotic Flow Equity
Derivatives Conference
Documenting Commodity Transactions using the
ISDA Documentation Structure Conference
Documenting Derivatives Transactions in
Emissions Allowances – ISDA Symposium
Documenting Interest Rate and Currency
Swaps – ISDA Symposium
Energy, Commodities & Developing Products
Conference
Equity Derivatives Documentation Workshop
Loan CDS Documentation – ISDA Symposium
Property Index Derivative Transactions and ISDA
Documentation – ISDA Symposium
Second Generation Credit Derivative
Documentation Conference
Understanding Collateral Arrangements and the
ISDA Credit Support Documents Conference
Understanding the ISDA Master Agreements
Conference
Variance Swaps and their Documentation

Conference & Event Locations 2008

The above conferences were held variously in these cities during 2008:
Athens Hong Kong Shanghai
Beijing Kuala Lumpur Singapore
Boston London Stockholm
Chicago New York Sydney
Dublin Paris Taipei
Frankfurt Prague Tokyo
Greenwich San Francisco Toronto

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International Swaps and Derivatives Association, Inc.

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