2009ISDAInternational Swaps and Derivatives Association, Inc.

ISDA 2009

A Yearbook of ISDA Activities

International Swaps and Derivatives Association, Inc.

OFFICESNEW YORK 360 Madison Avenue 16th Floor New York, NY 10017 Phone: (212) 901-6000 Fax: (212) 901-6001 LONDON One Bishops Square London E1 6AD United Kingdom Phone: + 44 (0) 20 3088 - 3550 Fax: + 44 (0) 20 3088 - 3555 HONG KONG Suite 1502 Wheelock House 20 Pedder Street Central, Hong Kong Phone: +852 2200 5900 Fax: +852 2840 0105 SINGAPORE 24 Raffles Place #24-02A Clifford Centre Singapore 048621 Phone: +65-6538-3879 Fax: +65-6538-6942 TOKYO Shiroyama Trust Tower 31st Floor 4-3-1 Toranomon Minato-ku, Tokyo 105-6031 Phone: (813) 5733-5500 Fax: (813) 5733-5501 WASHINGTON 1101 Pennsylvania Avenue Suite 600 Washington, DC 20004 Phone: (202) 756-2980 Fax: (202) 756-0271 BRUSSELS Rue Wiertz 50/28 B-1050 Brussels Tel: (322) 401 87 60 Fax: (322) 401 68 68

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TABLE OF CONTENTSFOREWORD DOCUMENTATION PROJECTS SUMMARY PRODUCTS & USERS CDS Hardwiring Interest Rates Natural Catastrophe Swaps Derivatives Users Committee Equity Derivatives Energy, Commodities & Developing Products Japan Property Derivatives INFRASTRUCTURE Portfolio Compression & Market Practice Changes Collateral Operational Scalability FpML SUPERVISION Accounting Fair Value Accounting EU Savings Tax Directive Financial Law Reform Public Policy - US Public Policy - EU Public Policy - EMEA Emerging Markets Public Policy - APAC Public Policy - Japan EDUCATION & OUTREACH Research Membership Current Members ISDA Conferences & Events 2008 1 6 11 11 13 15 16 17 19 20 21 21 23 25 27 29 29 31 32 33 35 37 39 41 43 45 45 48 50 59

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INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC. 2009 BOARD OF DIRECTORS OfficersEraj Shirvani, Chairman Managing Director, Head of Fixed Income for EMEA Region Credit Suisse Michele Faissola, Vice Chairman Managing Director and Global Head of Rates, Global Markets Division Deutsche Bank

Diane Genova, Treasurer Managing Director and General Counsel, Investment Bank J.P. Morgan Chase & Company

DirectorsThibaut de Roux Global Head of Structured Rates and Equity Products HSBC Bank plc Nitin Gulabani Global Head of Rates Standard Chartered Bank George Handjinicolaou Deputy CEO ISDA Alan Haywood Head of Oil Supply & Trading BP OIL International Peter Healey Managing Director UBS Investment Bank Frdric Janbon Global Head of Fixed Income BNP Paribas Dixit Joshi Managing Director: Head of Equities, EMEA and Asia Pacific Barclays Capital Pierre-Emmanuel Juillard Head of Structured Finance Division AXA Investment Managers Sotaro Kato Managing Director, Co-Head of Fixed Income Division Nomura Securities International, Inc Ted MacDonald Managing Director and Treasurer The D. E. Shaw group Stephen OConnor Managing Director Morgan Stanley Robert Pickel Chief Executive Officer ISDA Bill Powers Managing Director PIMCO Riccardo Rebonato Global Head of GBM Market Risk and Head Analytics Royal Bank of Scotland Thomas Riggs Managing Director Goldman Sachs Gerhard Seebacher Managing Director, Head of Global Credit Products Bank of America Atsushi Takahashi General Manager of Derivative Products Division Mizuho Corporate Bank, Ltd. Lili Wang Senior Executive Vice President ICBC Ltd.

Eric Litvack Managing Director, Global COO Volatility Trading Socit Gnrale

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 industryin terms of mergers, acquisitions and failuresoccurred 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 businessand in particular the credit default swaps businessfunctioned 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, resilient infrastructure has clearly been worth the effort. Default and settlement processes were handled efficiently. In addition, the actual amounts exchanged upon settlementand the risks of the relevant CDS positionswere far below reported projections. Figures are available from the Depository Trust & Clearing Corporations 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. ISDAs 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, legislators 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 industrys collective efforts. Together with its members and other industry groups, ISDA has worked extensively 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 ISDAs key initiatives in 2009 is the completion of a successful cash settlement auctionbased mechanism, a process which has been commonly referred to as hardwiring. Working side-by-side with ISDAs protocol amendment process, the auction mechanism played an important 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 significantly reducing systemic risk and increasing transparency. The Association continues to support initiatives and platforms that operate to eliminate economically redundant trades through portfolio compression and tear-ups. The success of ISDAs CDS settlement auctions and other strategic steps that ISDA is making 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 Associations 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 Jonathans 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 ISDAs membership, coupled with the expertise and talent its members bring to industry issues, are largely responsible for our continuing success in representing the global derivatives business. As ISDAs 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 derivativesthe total amount of trades that are outstanding. This decrease primarily reflects the industrys efforts to reduce risk by tearing up economically offsetting transactions, and demonstrates the industrys 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 years 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 template 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 obligations that are listed in the index. The Collateral Committee worked closely with major dealers to identify improvements in collateral 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 Support 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 mitigation 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 Presidents 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. PWGs 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 industrys interest in the Survey reinforces the importance of strengthening 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 Associations 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 Associations 2008 Annual General Meeting in Vienna, Austria, which featured leading speakers from the industry, government and academia, was well attended. ISDAs April 2009 AGM in Beijing, China will again bring together key players to consider the important role that derivatives play in the global economy.

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Looking Ahead Theres no question that the turmoil in the global financial markets has brought significant challenges 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 SummaryKey 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 backdrop, 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 completed 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 Europeanbased 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 Protocol 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 documentation so that in the event of a counterparty failure, the agreed method of determining prices is by CloseOut 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 Chinas 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 ISDAs 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 Multiple Exchange Index Annex; and an Open Market Annex OMISO, which documents cash and physically-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 cashsettled 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 ISDAs 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 documentation 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 standard 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 ongoing 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 underway. 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 TaHawwut (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 Curiaeor friend of the courtin 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 General Counsel DGeen@isda.org Katherine Darras General Counsel, Americas KDarras@isda.org Jacqueline Low Senior Counsel, Asia Pacific JLow@isda.org Mark New Assistant General Counsel MNew@isda.org Jing Gu Assistant General Counsel, Asia Pacific JGu@isda.org Rosario Chiarenza Counsel RChiarenza@isda.org Kirsty Devonport Counsel KDevonport@isda.org

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Products & Users

Products & Users

CDS Hardwiring

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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 operationally efficient.

The event is a milestone in the ongoing refinement of practices and processes for the efficient, liquid and transparent conduct of the CDS business. Hardwiring is central to the many improvements ISDA and the industry are making to the CDS contract, to further ensure that infrastructure and standards for these important risk management instruments are straightforward, secure and widely implemented.

and commitment that both buy-side and sell-side participants and the regulatory community have invested in this process. Key attributes include: incorporation into the standard documentation of Auction Settlement provisions that eliminate the need for credit event protocols; Resolutions of the Determinations Committees, comprising dealer and buy-side representatives to determine, for example, whether credit events have taken place; Credit and Succession Event Back-

In recognizing the benefits hardwiring will bring, we must also recognize the insight, hard work

stop Dates that institute a common standard effective date for CDS trades.

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In combination with the changes in market practice that support standard coupons for CDS, these developments will introduce greater certainty to transactional, operational and risk considerations for treatment 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

derivative industrys objectives.

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orking in conjunction with Association members, ISDAs legal and documentation activities 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

Additional Provisions For Use With a Deliverable Currency Disruption (Additional Provisions) and ISDA Deliverable Currency Disruption Fallback Matrix (Fallback Matrix), were published by ISDA in November. These address the processing of a payment stream denominated in a currency that at the inception of a transaction was convertible but has subsequently become inconvertible. ISDA is working with Association members to increase the number of currencies covered by the Additional Provisions and Fallback Matrix on a continuing basis. These documents exemplify the commitment of market participants, working

together under the auspices of ISDA, to proactively tackle issues that could lead to operational inefficiencies if left unaddressed.

Responding to member feedback, and in coordination with the Interest Rate Operations Working Group, ISDA published numerous supplements to the 2006 ISDA Definitions during 2008. One key development was Exhibit II-J, Additional Provisions for a Confirmation of a Constant Maturity Swaps One Look Transaction. This template illustrates ISDAs continuing efforts to reduce documentation riska core ISDA objectiveby pub-

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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 ISDAs 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 Swapsidentified as important developing products. Documentation for many of these products begins as bespoke derivatives contracts and as the market matures, ISDA works with Association members to forge standard confirmations.

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apid product innovation and standardization of product documentation are hallmarks of the over-the-counter derivatives industry. At last years Annual General Meeting in Vienna, Natural Catastrophe Swaps, particularly US Wind Event and US Earthquake Event Swaps, were

Drawing Association members from a wide range of backgroundsfor example, re-insurers, dealers and end-usersISDA formed the Catastrophe Swap Working Group to begin working on standardization. The working group decided to concentrate efforts on developing a standard US Wind Event confirmation and then expand to other Natural Catastrophe products.

At the time of publication, the US Wind Event Confirmation was due for finalization. The US Wind Event Confirmation project is a fine illustration of how Association members, working through ISDA, can transform a relatively bespoke, illiquid product into a commoditized, liquid product. Building on the success of the Working Group, ISDA plans to tackle other Natural Catastrophe Swaps, including US Earthquake Event confir-

Among the many key points addressed by the Working Group was the length of the period to determine the occurrence of a loss trigger event (called the US Wind Event), and appropriate extension thresholds. The group has provided a menu of possible US Wind Event terms, allowing for greater customization of the swap, while still benefitting from standardized documentation.

mations, in the near term.

CONTACT: Rosario Chiarenza Counsel RChiarenza@isda.org

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Products & Users

Derivatives users committee

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

ISDA has long recognized the importance of the buy side in its membership structure, with the Subscriber category constituting a healthy third of the total number of member firms. But the Association went a step further in 2008, adding three new buy-side positions at Board level, to diversify member representation at senior levels, and to better serve the needs of all ISDA members. The three new Board members are: Pierre-Emmanuel Juillard, Head (and founder) of Structured Finance Division, AXA Investment Managers Ted MacDonald, Managing Director, DE Shaw group Bill Powers, Managing Director and Member, PIMCO Investment Committee.

part of the hardwiring of new settlement procedures in credit derivatives.

While these moves clearly underline the role of investment firms in OTC derivatives, ISDA will continue to seek out the views of all constituencies within the end-customer base. The use of interest rate swaps and currency derivatives continues to grow and, with government deficits rising, the many national debt management offices in ISDAs membership appear likely to become more active.

CONTACT: Richard Metcalfe 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

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Products & Users

Products & Users

Equity Derivatives

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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 standard option terms for transactions referencing Emerging European and Asia Closed Market shares and indices. We are also developing standard basket option language for generic use in the four equity regions (US, Europe, Asia ex-Japan and Japan) as well as substitution language for use when an extraordinary corporate event occurs. We are completing documentation for the interdealer discrete swap business for all regions. ISDA remains committed to consistency of language among regions in order to attain the great-

est possible degree of uniformity of approach, which in turn assists processing and automation.

Once the June 2009 documentation suite is completed, future projects will be selected according to product volume metrics for non-electronically eligible transactions. One factor in considering a new project will be whether standardization of its documentation will facilitate electronic trade processing. ISDA has also committed to an update of the 2002 Equity Derivatives Definitions in 2010.

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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 standard 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

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.

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number of documentation projects are currently underway in the area of energy, commodities 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

In physical oil trading, the Canadian Addendum to the ISDA US Oil Annex will be finalized in spring to form the ISDA North American Oil Annex. Prepublication drafts of the confirmation templates to the ISDA Global Physical Coal Annex for forward and option transactions were circulated in March.

develop an additional form to cover transactions into non-EU registries, mainly Switzerland, Japan, Australia and New Zealand. The new template, to be circulated in April, will include language for operational provisions that are common to all national registries under the UN Kyoto Protocol, plus country-specific sub-annexes to cover any domestic exceptions. The existing ISDA US Emis-

Trading emissions allowances is another focus for 2009. Based on the ISDA form for emissions transactions in the EU trading scheme, ISDA will

sions Annex has been revised to include carbon allowance transactions under regional trading schemes currently operational, such as RGGI.

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An increase in the number of Continental trading hubs covered by ISDA European Gas Annex for physical gas trading is targeted. ISDA is in touch with NAESB about the effects of changes proposed by NAESB on the ISDA North American Gas Annex, and the need to develop supplemental ISDA language to that effect. Updating the ISDA Energy Bridge and developing stan-

dardized language for letters of credit are also to be addressed in 2009, and a project to develop ISDA templates for commodity index transactions is now underway. CONTACT: Peter Werner Policy Director PWerner@isda.org

Japan Property Derivativesments for property indices for derivatives transactions. Indices sponsored by IPD and Association for Real Estate Securitization (ARES) were deemed most suitable. ARESs index was included in the Annex A of the 2007 ISDA Property Index Derivatives Definitions published in July 2008.

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

Documentation is another important element for the growth of the market. The Japan Property Derivatives Documentation Task Force was formed to prepare and amend the confirmation template for Japanese property index derivatives.

fied in Article 35. It is still unclear, however, whether banks can enter into property index derivatives under the Banking Act. Regulators indicated concerns on the impact on the financial strength of banks, as well as the soundness of property indices. ISDA will continue dialogues with the FSA for cross-regulatory

Under the Financial Instruments and Exchange Act (FIEA), property index derivatives would be considered as any other business incidental to the financial instrument business, as speci-

clarifications. CONTACT: Tomoko Morita Policy Director & Head of Tokyo Office TMorita@isda.org

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Infrastructure

Portfolio Compression & Market Practice Changes

Infrastructure

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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 focused 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 outstanding trade count and gross notional by replacing portfolios of existing bilateral trades which have the same reference entity, restructuring basis and maturity with two trades of the same reference entity, restructuring basis and maturity.

ing is lowered which allows for increased capital efficiencyfirms can set aside less capital for their CDS positions while maintaining the same risk profile and cash flows across all counterparties. Depending on how the limits are set, the risk profile with a specific counterparty might change, if participants allow for that change.

The reduced trade count reduces operational risk at the time of a credit event, as there are fewer trades to settle. Efficiency is also enhanced as a result of there being fewer trades to maintain and make payments on. Gross notional outstand-

Following a selection process under the guidance of the ISDA Credit Steering Committee, Markit Partners and Creditex were chosen to do the initial rounds of portfolio compression for single name trades. These started in August 2008

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and have continued into 2009 on a frequent basis for both North American and European reference entities. In addition to the work being done by Markit and Creditex, Trioptima continued its work on trade reductions in the index space.

Modified Restructuring credit event, although it will continue to be available for those parties that want to specifically cover this credit event. These changes lead to a further standardization of the market and will facilitate the implementation of a central clearing environment for CDS trades. Dis-

The success of compression both for single name and index trades explains a good portion of the reduction in outstanding notional in 2008 from the previous years record.

cussions are ongoing for standardization in other jurisdictions.

CONTACT: On April 8, 2009 the market practice for North America changed the use of fixed coupons of 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 American market will no longer trade by default with the Karel Engelen Director and Global Head, Technology Solutions KEngelen@isda.org

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Infrastructure

CollateralInfrastructure

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he last year has been exceptionally productive for ISDAs 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:

Portfolio Reconciliationthis group has driven process improvement and uptake. All 16 firms met the target of performing weekly (or better) reconciliations of all intra-group portfolios of more than 5,000 trades by the end of 2008. Follow-on targets, both quantitative and qualitative, have been agreed upon.

deliver the above-mentioned roadmap in May 2009. Topics covered include the production of a best practice document, standardization, electronic communication of margin calls and interest payments, margin call time frames and central intermediation of margin calls.

Dispute ResolutionAnalysis of existing meth Potential Industry Improvementsthis group will odologies will result by end-April in the Groups

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recommendation for improvements and standard methodologies in this area. Infrastructurethis is the forum for engagement between the firms and the vendor solution providers in collateral; it will take forward the build/ enhancement requirements identified by the other groups.

CONTACT: Julian Day Head of Trading Infrastructure JDay@isda.org Nichole Framularo Director of Trading Infrastructure NFramularo@isda.org 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

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Infrastructure

Operational ScalabilityInfrastructure

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ver the past year, there has been unprecedented activity within the derivatives space. Market events have demonstrated that the operational infrastructure works well, but further improvements 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 to regulators in March, July and October which detailed operational targets, commitments and strategies. ISDA worked in conjunction with the major dealers and buy-side institutions represented on the Operations Management Group (OMG) to present a series of strategic steps to further strengthen the operational infrastructure for OTC derivatives at varying points in time throughout the lifecycle process.

The commitments cover all major OTC derivatives asset classes as well as look to improve collateral management practices for these transaction types. Key targets include:

increased electronic processing of eligible trades; enhanced trade date confirmation issuance and execution; elimination of material confirmation backlogs; risk mitigation for paper trades;

25

streamlined trade life cycle management; reduction in levels of outstanding trades via portfolio compression; central settlement for eligible transactions.

Questions Guide on Credit Derivative Processing Standards.

As the over-the-counter derivatives industry continues to improve its post-trade performance ef-

Each of these efforts aims at reducing manual intervention and increasing straight-through-processing aspects where possible.

ficiency across a range of metrics, industry implementation groups will continue to work toward further automation, confirmation backlog reductions and increased use of technology to optimize

To continue the operational improvements, market participants agreed on several fundamental milestones, including use of central counterparties for credit derivative transactions, increasing the portion of equity derivatives eligible for electronic matching, increasing credit derivative electronic submission timeliness for eligible transactions, and developing plans for central trade repositories for equity and interest rate derivatives.

efficiency.

CONTACT: Julian Day Head of Trading Infrastructure JDay@isda.org Nichole Framularo Director of Trading Infrastructure NFramularo@isda.org 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

In an effort to advance industry objectives, ISDA co-sponsored educational events that provided detailed updates on the commitments and their current states-of-play in New York, London, Sydney, Hong Kong and Tokyo. These events aimed to further the industrys understanding of the various operational commitments. Additionally, ISDA jointly published a Frequently Asked

26

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 published as Recommendations, within the 6-month cycle for minor versions. Version 4.5 became a Recommendation in March 2009 and the development of version 4.6 has begun. The next major version (5.0), is moving towards completion. At this stage, most major architectural changes have been agreed upon and are implemented in the draft versions. The collateral area has been targeted for further development.

try lead to a continuous need to improve and expand the coverage of the underlying standards. This standardization and automation will further increase the usefulness and importance of FpML as a technical standard.

CONTACT: Karel Engelen Director and Global Head, Technology Solutions KEngelen@isda.org

Together with Swift, FIX and ISITC, FpML published an industry roadmap to reflect how the different financial industry standards can fit together 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

FpML

Blue Sky Thinkingwww.fpml.org28

Risk & Reporting

Accounting

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.

C

hanges to accounting for financial instruments proposed by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) in 2008 affected ISDA members around the world. ISDA Accounting Committees were particularly active

Supervision

In Europe, IASB proposed several amendments to IAS 39 on hedge accounting and classification of financial assets. Of particular importance were some fast-tracked proposals on reclassification of financial assets, and another on embedded derivatives. The Accounting Committee was active in all consultations, and was also involved with the FASB proposals to clarify paragraph 14B of Statement 133, which discusses whether an embedded derivative must be separated from its host contract. FASBs Statement 161 proposals

then amended Statement 133, by requiring expanded disclosures about an entitys derivatives and hedging activities.

FASB and IASB issued an updated Memorandum of Understanding (MOU) describing priorities and milestones related to the completion of major projects by 2011. IASB board member Stephen Cooper, speaking at ISDAs Accounting Symposium in London, said that while the two boards have made considerable progress in converging

29

their sets of standards, progress on other major projects has been limited. Differences in views about the scope of the projects, and on resolving similar issues in active projects, have hampered results. In response, the boards put together a team to develop recommendations on moving forward.

CONTACT: Ed Duncan Director, Head of Risk and Reporting EDuncan@isda.org Huzefa Deesawala Head of Finance HDeesawala@isda.org Antonio Corbi Assistant Director, Risk and Reporting ACorbi@isda.org

The Accounting Committee responded to the IASC Foundation (IASCF) consultation to enhance its Constitutional framework. The IASCF is the legal entity under which IASB operates, and is governed by a board of 22 Trustees. ISDA participated in all roundtables to promote the independence of the IASB standards process.

Looking forward, convergence to one set of global accounting standards is a key initiative in the years ahead. The SEC proposed a roadmap toward the use of International Financial Reporting Standards (IFRS) as the global accounting standard. A transition to IFRS for fiscal years ending after December 2014 has been proposed.

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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 assumptions 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. ISDAs Accounting Committee was actively involved throughout the consultation process.

ISDA members were selected last year for IASBs Expert Advisory Panel, which issued a report on fair value measurement and disclosures for illiquid instruments. The EAPs report has become a trusted source of educational guidance on both sides of the Atlantic.

was based on amortizing costs. The delayed response only worsened the damage.

Policymakers recommendations should support transparency measures. Fair value is one of the

Supervision

tools to restore investor confidence and resume normal bank lending behaviour. Refinements in

It seems clear that fair value is on the minds of many as we negotiate the current economic turmoil, especially as it relates to mark-to-market accounting. Failure to use mark-to-market has caused difficulties before. Large losses made by banks during the 1973 oil crisis and the 1990s Japanese banking crisis had their roots in nonperforming mortgage portfolios. In both cases, losses were not recognised (that is, marked to market) for years since the accounting model

measuring and reporting profit and losses for financial instruments that do not trade or trade in illiquid markets could be introduced without compromising the core principles of fair value.

CONTACT: Antonio Corbi Assistant Director, Risk and Reporting ACorbi@isda.org

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

The actual assessment of any associated tax liability is purely a matter for the tax administration and the beneficial owner since the information exchange process is quite distinct from the tax assessment. The objective is to ensure that citizens of one Member State do not evade taxation by either depositing funds or transacting outside their jurisdiction of residence, thus distorting the single market. Through better regulation the EU may be also tempted to make taxable, within the scope of the Directive, more complex structures. However, there are proposed obligations under the Directive that have the potential to create havoc among European financial institutions. The first is the operational burden that might 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 debtgenerating obligations that could be characterized as income.

The European Commission is also negotiating with certain countries outside the EU, such as Switzerland, Lichtenstein, or the United States, to make them enact equivalent provisions. Without such measures, the purpose of reducing tax evasion is unlikely to be achieved, but would still impose a huge cost to Member States financial institutions.

CONTACT: Ed Duncan Director, Head of Risk and Reporting EDuncan@isda.org Antonio Corbi Assistant Director, Risk and Reporting ACorbi@isda.org

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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 Harmonised 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 preliminary 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.

Supervision

In the meantime, the European Commission continues its review of the EFMLG/ISDA proposal for an EU directive on netting. Several other industry associations have expressed support for the proposal as well. A key aspect of the proposal is the harmonization of set-off and netting provisions across various EU instruments. Some of the instruments addressed include the Collateral Directive, Winding-up Directives (for credit institutions

and insurance companies), the Settlement Finality Directive, and the Insolvency Regulation.

In the context of UNCITRAL (the United Nations Commission on International Trade Law) ISDA was invited to an expert group of the Financial Markets Law Committee to discuss the effects of a possible UK adoption of the UN Convention on Contracts for the International Sale of Goods

33

(CISG/Vienna Sales Convention). This treaty is in force in most major jurisdictions in the Americas, Europe and Asia. The convention has effects on physical and financial transactions in a range of commodities and commodity derivatives, especially those governed by English law. It is widespread practice to exclude the CISG from transactions governed under any other law (in particular New York law), and recent ISDA documentation in this area has featured a CISG waiver provision (eg the ISDA US Oil Annex).

In February 2009 the UK Banking Act introduced a new netting regime for transactions with British banks and building societies. One of the main features is the special resolution regime for failing banks and building societies. For the moment, the previous netting regime remains in place for transactions with all other types of UKbased counterparties. However, it is intended to extend the new regime to investment firms over the summer of 2009.

Several pieces of secondary legislation entered On the European Union level, the EU Regulations on the Law Applicable to Contractual Obligations (the so-called Rome 1 Regulation) and Non-Contractual Obligations (Rome 2 Regulation) have entered into force. The Brussels 1 Regulation, on the Recognition and Enforcement of Judgments in Civil and Commercial Matters, is up for review. In the context of transactions under English law among counterparties located in EU jurisdictions, all these regulations have an effect on the choice of law provisions, as well as the choice of forum clause. In a separate project, ISDA co-chairs a working group of legal practitioners and academics that in March 2009 started discussing the use of arbitration in financial services, especially derivatives. CONTACT: Peter Werner Policy Director PWerner@isda.org into force at the same time. Among them is the Restriction of the Partial Property Transfer Order 2009 (Safeguards Order). It aims to protect all transactions commonly included in netting and collateral arrangements. Upon publication, ISDA made specific proposals to the UK authorities in order to address some shortcomings that affect the contents of any legal opinion involving UK banks and building societies. UK authorities intend to make the clarifications before mid-year.

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Public Policy

United States

T

he last two years have seen a rapid shift in perceptions about OTC derivatives from public policymakers 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 greater support culminating in passage last year of the CFTC Reauthorization Act of 2008. This law increased regulation and oversight of so-called significant price discovery contracts, or OTC contracts in commodities, which were closely tied to prices on exchange-traded futures contracts. Passage of the legislation was immediately followed by even greater support for new restrictions on OTC activity, particularly with respect to

the role of speculation in high commodity prices. After the credit market collapse, derivatives have come under even greater scrutiny in the US. Current legislative proposals require that all OTC derivatives be cleared, give US regulators the power to order OTC participants to liquidate their positions, and in some cases even call for an outright ban on OTC derivatives. Although such a ban is unlikely, its proponents form a powerful minority in the US policymaking community.

35

The outlook suggests that significant change in the US regulatory approach to OTC derivatives is likely. What form this change will take is not yet clear, but across both the regulatory and congressional communities there is a consensus that greater transparency and oversight is required.

CONTACT: Greg Zerzan Counsel and Head of Global Public Policy GZerzan@isda.org

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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 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.

Supervision

The working group will now begin looking at the other types of OTC derivatives, plus issues such as transparency. ISDA has already contributed to a Committee of European Securities Regulators (CESR) consultation on transparency. Information gleaned from CCPs and from the Depository Trust & Clearing Corporation (DTCC) Trade Warehouse may prove valuable therein.

Concerns about CDS combined with the rocky start of the working group had prompted proposed amendments to the Capital Requirements Directive (CRD) in the European Parliament, levying punitive capital requirements on CDS trades not cleared in a European CCP. These amendments were defeated, though the EP called for a review of OTC derivatives markets (an EC report will be published end-2009). The Market in Financial In-

37

struments Directive (MiFID) is also under review, with derivatives a thematic priority.

markets. Policymakers have found no clear link 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 from MIFID and CRD. ISDA helped persuade policymakers to support later expiry of an exemption from the CRD (from end-2012 to end-2014), pending this review. CONTACT: Richard Metcalfe Global Head of Policy RMetcalfe@isda.org Roger Cogan European Policy Director RCogan@isda.org

ISDA is also busy at EU level defending the role of non-commercial participants in commodity

38

Public Policy

Emea Emerging Markets

I

n Europe, Poland and Slovakia have become focus countries for ISDAs 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 collateral 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 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.

Supervision

Among countries in the CIS region, Russia continues to be the top priority. It is expected that the Russian government will submit its draft bill on netting to the Lower House in April. The main regulator provided a rough outline of its ideas during an event jointly organized by EBRD, ISDA and three Russian banking associations in late 2008. This draft bill is meant to replace an earlier

version that was submitted to the Lower House in late 2007. Additionally, the final version of a Russian local master agreement is scheduled for publication in the summer. ISDA is an observer to the drafting process.

In Ukraine, ISDA is involved in discussions with local regulators and parliament in order to include

39

major amendments to a draft bill on derivatives which had been initially proposed in 2007. A revised draft from 2008 is on hold in order to allow for more input from experts. In January 2009, the Civil Code of Kazakhstan was amended to include definitions of various derivative instruments. Pursuant to talks with Kazakh regulators, ISDA has been requested to provide comments on the forthcoming draft bill on netting.

Discussions on the general legal framework for derivatives transactions have also been initiated with regulators in Qatar.

Africa In late March, a new draft bill on insolvency was submitted to parliament in Mauritius. The bill includes a chapter drafted by ISDA and endorsed by the local banking association to introduce close-out netting into local law, as well as

Middle East The final draft of the ISDA/IIFM TaHawwut (Hedging) Master Agreement, the Islamic version of the conventional ISDA Master Agreement, has been submitted for final approval to the IIFM Board of Shariah Experts. Publication is expected for mid-2009. Version 1 of this document will cover Islamic profit-rate swaps based on commodity Murabaha. ISDA met with regulators in the United Arab Emirates to discuss the introduction of the uniform legal regime for derivatives transactions on the federal law level. Of key concern are general derivatives transactions issues, and close-out netting in particular. ISDA has been asked to provide official comments on existing regulations issued under the auspices of various regulators. Currently three different regulators supervise different areas of the markets.

updated conflict of law provisions in the area of intermediated securities. Updates on the general legal framework for derivatives in Morocco and Egypt have been circulated to the ISDA CEE/ EMEA Committee.

In the context of ISDAs proposal to UNIDROIT on a global convention on netting in financial services, initial contacts to regulators in Nigeria have been established, in order to emphasize the need for legal reform. Recently, regulators have started efforts to establish a local swap market.

CONTACT: Peter Werner Policy Director PWerner@isda.org

40

Public Policy

Asia Pacific

discipline approach to regulation, though this is tempered by a desire to protect individual domestic constituencies 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 transactions 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

S

ome broad trends and noteworthy themes that have emerged across the APAC region in response 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

Supervision

Asian regulators have also been following international developments such as central counterparty clearing (CCP), anti-cyclical regulatory capital requirements and MTM accounting changes. Some would like to see their own national champions emerge as the Asian CCP, though rivalries and lack of economies of scale present challenges to regional implementation.

Also of concern are the court cases that have been filed in South Korea and India, especially the Korean cases. In 3 out of 6 cases, the Seoul District Court has granted payment injunctions to Korean exporters that had put on (frequently leveraged) Won KIKO (knock-in, knock-out) option trades that have gone against them as the Won depreciated. Though the Korean Civil Code

41

does enshrine the requirements of trust and good faith in dealings, the courts liberal interpretation of this and the related doctrine of changed circumstances means that banks can no longer safely transact on an arms length basis with their counterparties, and that enforceability of legal contracts is undermined. Indeed, the courts decisions are tantamount to a finding that banks owe a duty of care to their counterparty and must ensure that the transaction is suitable and that the counterparty both understands and can manage the risks of the transaction.

In the India cases, interim orders have so far basically upheld the sanctity of contracts. Nevertheless, ISDA is keeping a close watch on all these pending cases.

CONTACT: Keith Noyes Regional Director, Asia Pacific KNoyes@isda.org Jacqueline Low Senior Counsel, Asia Pacific JLow@isda.org

42

Public Policy

JAPAN

T

hroughout 2008, ISDA continued to provide forums for members to contribute to the development of Japans 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 prepared 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 financial crisis.

Supervision

On the equities front, the Variance Swap Working Group formed under the Japan Equity Derivatives Committee continued active discussions on the circumstances under which exchange-imposed daily price limitations constitute a Market Disruption Event for equity variance swaps. ISDA facilitated conference calls for market participants to consider different approaches in promoting orderly valuation and settlement. As a result, the Working Group agreed on a set of guidelines

in March 2009, published by ISDA as a Market Practice Statement.

ISDA carried on dialogue with Japanese regulators on improving the market environment, and addressed remaining issues in implementing the Financial Instruments and Exchange Act (FIEA). FIEA covers the treatment of collateral posted against OTC financial future transactions in light of client asset segregation rules. These are situ-

43

ations in which the loan and set-off approach in ISDAs Collateral Support Documents would not be appropiate.

CONTACT: Tomoko Morita Policy Director & Head of Tokyo Office TMorita@isda.org Kumi Namba Assistant Director, Policy KNamba@isda.org

In the new products area, ISDA was involved in the deliberations of the Study Group organized by the Ministry of Economy, Trade and Industry on Japans emissions trading market. ISDA submitted comments to the resulting report on practical issues such as transfer/delivery/settlement of Kyoto Credits, and valuation methodology.

Accounting standards are increasingly important for the sound development of the OTC derivatives market. The Japan Accounting Committee was formed in 2008 to discuss and examine market practices, such as hedge fund accounting rules, fair value measurement and international convergence of accounting standards.

44

Education & Outreach

Research

T

he ISDA Research team supports education and policy activities, primarily by means of seminars 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 dont 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 developed a recurring seminar on Counterparty Credit Risk. The new seminar covers measurement and management of the credit risk associated with derivatives. In addition to presentations by ISDA Research staff, the seminar features a practitioner panel consisting of lawyers and collateral managers. See www.isda.org for upcoming dates.

ISDA Research continues its regular Survey activities, which consist of the semi-annual Market Survey and the annual Margin Survey and Operations Benchmarking Survey. The Operations Benchmarking Survey underwent significant re-

Education & Education & Outreach Outreach

visions for 2008 in order to achieve consistency with the data contributed by the G16 dealer group. In addition, the Market Survey now distinguishes between bought and sold protection

45

in its credit default swap notional amounts. The above notional amounts, which total $531.2 trillion across asset classes, are an approximate measure of derivatives activity, and reflect both new transactions and existing transactions. The amounts, however, are a measure of activity, not a measure of risk. The Bank for International Settlements (BIS) collects both notional amounts and market values in its derivatives statistics and it is possible to use the BIS statistics to determine the amount at risk in the ISDA survey results.

tions of market standards. One recent effort has been to clarify the compounding conventions used in derivative transactions; results are posted on the Trading Practice Committee webpage. Another has been to work with other industry groups to ensure consistency across documents for varying asset classes. CONTACT: David Mengle Head of Research DMengle@isda.org Anatoli Kuprianov Director of Technical Analysis AKuprianov@isda.org Julia Pachos Research Associate JPachos@isda.org

Finally, ISDA Research continues its involvement in clarifying market practice for OTC derivatives, with the objective of reducing the number of disputes that might arise from differing interpreta-

46

Education & Outreach

Source: ISDA Research

Education & Outreach

Membership

I

n 2008 ISDA welcomed 100 new members. To date ISDAs membership totals over 820 financial 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. ISDAs members are classified into three categories according to the guidelines contained in its by-laws.

Primary Members dealer firms According to the Associations by-laws, every investment, merchant or commercial bank or other corporation, partnership or other business organization that, directly or through an affiliate, as part of its business (whether for its own account or as agent), deals in derivatives shall be eligible for election to membership in the Association as a Primary Member, provided that no person or entity participates in derivatives transactions solely for the purpose of risk hedging or asset or liability management.

provides a forum for these industry participants to stay abreast of and contribute to important developments and initiatives.

Subscriber Members end-users ISDAs Subscriber Membership category is designed for corporations, financial institutions, government entities and others who use privately negotiated derivatives to better manage financial risks. Subscriber Membership provides a forum for these industry participants to stay abreast of and contribute to important developments and initiatives.

Associate Members service providers ISDAs Associate Membership category is designed for service providers brokers, law firms, accounting firms, consulting firms and software providers who are active in the privately negotiated derivatives business. Associate Membership Only ISDA members are entitled to receive the Associations legal opinions on the enforceability of the netting provisions of the ISDA Master Agreements. ISDA has obtained netting opinions for 53 jurisdictions. In addition to the netting opin-

48

ions, ISDA provides members with legal opinions on the ISDA Credit Support Documents from 43 different jurisdictions.

receive complimentary copies of all new publications upon their release.

Only ISDA members are eligible to attend the AsOnly ISDA members are able to participate in the Associations numerous Committees, Working Groups and Task Forces, which serve to address issues in the rapidly evolving derivatives market. sociations Annual General Meeting, which is the industrys preeminent forum for the discussion of developments and issues in the privately negotiated derivatives business.

ISDA members exclusively receive the numerous policy papers, response letters, market survey data and communications on key business issues that the Association and its consultants generate.

In addition, a strong preference is given to enlisting speakers from ISDA member firms at the Associations numerous conferences and seminars.

CONTACT: ISDA members receive substantial discounts when ordering copies of the Master Agreement and supporting documents published by the Association. Primary Contacts at member firms Liz Zazzera Director of Conferences & Membership LZazzera@isda.org

Education & Outreach

ISDA PRIMARY MEMBERSAbbey National Plc ABSA Bank Ltd. Abu Dhabi Commercial Bank Accord Energy Limited Agricultural Bank of China Allied Irish Banks, plc American International Group, Inc. American International Group, Inc. AmInvestment Bank Bhd Andorra Banc Agricol Reig, S.A. (ANDBANC) Aozora Bank Assured Guaranty Corp. Australia and New Zealand Banking Group, Limited Axis Bank Ltd. Banca Akros Spa Banca Aletti & C. S.p.A. (Gruppo Banco Popolare di Verona e Novara) Banca dIntermediazione Mobiliare IMI S.p.A. BANCA INTERMOBILIARE SpA Banca Monte Dei Paschi Di Siena SpA Banca Popolare di Milano scarl Banca Popolare di Vicenza Banca Profilo, S.p.A. Banco Bilbao Vizcaya Argentaria, S.A. Banco BPI, S.A. Banco Bradesco S.A. Banco Comercial Portugues S.A. Banco Espanol de Credito, S.A. (BANESTO) Banco Esprito Santo S.A. Banco Ita S/A Banco Popular Espanol Banco Votorantim S/A - Nassau Branch Bank BPH SA Bank Hapoalim B.M. Bank Julius Baer & Co. Ltd. Bank Leumi le-Israel B.M. Bank of America N.A. Bank of Beijing Co., Ltd Bank of China Bank of Ireland Global Markets Bank of Montreal The Bank of New York Mellon Bank of Ningbo Co., Ltd Bank of Nova Scotia Bank of Scotland plc, Treasury Bank of Shanghai Co., Ltd. Bank Vontobel AG Bankthai Public Company Limited Banque Degroof SA Barclays Capital Bayerische Hypo-und Vereinsbank AG (HVB) Bayerische Landesbank BHF Bank (Berliner Handels-und Frankfurter) BNP Paribas BP Plc Branch Banking and Trust Company (BB&T) BRE BANK SA BSI SA Caixa d Estalvis i Pensions de Barcelona la Caixa Caja De Ahorros De Galicia Caja de Ahorros Y Monte de Piedad de Madrid Calyon Corporation Cargill, Incorporated Carnegie Investment Bank AB Cesk sporitelna, a.s. China CITIC Bank China Construction Bank China Development Financial Holding Corporation Chinatrust Commercial Bank Chuo Mitsui Trust & Banking Co. Ltd. CIBC World Markets Inc. Citigroup Commerce International Merchant Bankers Berhad Commerzbank AG Commonwealth Bank of Australia Confederacion Espanola de Caja de Ahorros ConocoPhillips Coral Energy, L.P. Credit Industriel et Commercial (CIC) Credit Suisse Daiwa Securities SMBC Co. Ltd. Danske Bank A/S DBS BANK LTD DEPFA BANK plc Deutsche Bank AG Dexia Bank Belgium S.A. DnB NOR Bank ASA Dresdner Bank AG DZ BANK AG Deutsche Zentral-Genossenschaftsbank E.Sun Commercial Bank, Ltd. EDF Trading Limited EFG Eurobank Ergasias S.A. EFG International Erste Bank Group AG Europe Arab Bank plc F. van Lanschot Bankiers N.V. The First International Bank of Israel Ltd.

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ISDA PRIMARY MEMBERSFirstRand Bank Limited Fortis Bank NV/SA GASELYS Generali SGR S.p.A. Goldman Sachs & Co. Gulf International Bank (UK) Limited Hamburger Sparkasse Hang Seng Bank Limited HDFC Bank Limited Hess Energy Trading Company, LLC HSBC Holdings plc HSH Nordbank AG Hydro-Quebec ICICI Bank Limited IKB Deutsche Industriebank AG Industrial and Commercial Bank of China Industrial Bank Co., Ltd. Industrial Bank of Korea ING Bank N.V. Intesa Sanpaolo SpA Investec Bank Limited Irish Life & Permanent plc J.P. Morgan Chase & Co. Jefferies Group, Inc JSC Halyk Bank Jyske Bank A/S KASIKORNBANK Public Company Limited KBC Bank KeyCorp Koch Supply & Trading, LP Komercn banka, a.s. Kookmin Bank The Korea Development Bank Korea Exchange Bank Kotak Mahindra Bank Ltd. Landesbank Baden-Wrttemberg Landesbank Hessen - Thueringen Girozentrale Lloyds TSB Bank plc Macquarie Bank Limited Maple Bank GmbH Meliorbanca S.p.A. Mitsubishi UFJ Financial Group (MUFG) Mitsui & Co., Ltd. Mizrahi Tefahot Bank Ltd. Mizuho Financial Group Morgan Stanley & Co. International plc National Australia Bank Limited National Bank of Abu Dhabi National Bank of Canada National Bank of Greece National Bank Trust National City Bank NATIXIS Nedbank Limited NIBC Nomura Securities Co., Ltd. Norddeutsche Landesbank Girozentrale Nordea Bank Finland Plc Norinchukin Bank nv Nuon Energy Trade & Wholesale Nykredit Bank A/S Osterreichische Volksbanken-Aktiengesellschaft Oversea-Chinese Banking Corporation Limited Piraeus Bank S.A. PNC Bank, N.A. Pohjola Bank plc Rabobank Nederland Raiffeisen Zentralbank Austria AG Regions Bank Renaissance Capital Resona Bank, Ltd. Royal Bank of Canada The Royal Bank of Scotland plc RWE Supply & Trading GmbH Sal. Oppenheim jr. & Cie KGaA Samsung Securities Co., Ltd. Santander Central Hispano, S.A. Shanghai Pudong Development Bank Shinko Securities Co., Ltd. Shinsei Bank, Limited Shoko Chukin Bank Skandinaviska Enskilda Banken SMBC Capital Markets, Inc. Societe Generale The Standard Bank of South Africa Standard Chartered Bank STASCO State Bank of India State Street Bank & Trust Company Sumitomo Mitsui Banking Corporation Sumitomo Trust and Banking Co., Ltd. Suncorp-Metway Limited SunTrust Robinson Humphrey Capital Markets Svenska Handelsbanken (Handelsbanken Markets) Swedbank AB Swiss Re Financial Products Sydbank A/S Taishin International Bank The Toronto-Dominion Bank Totsa Total Oil Trading S.A. Troika Dialog NEW MEMBERS APPEAR IN ITALICS 51

ISDA PRIMARY MEMBERSTurkiye Garanti Bankasi A.S. UBS AG Union Bank of India United Bank Limited United Overseas Bank Limited VTB Bank Europe plc Wachovia Corporation Wells Fargo Bank Westdeutsche Genossenschafts-Zentralbank eG WestLB AG Westpac Banking Corporation XL America, Inc. Zurcher Kantonalbank TOTAL PRIMARY MEMBERS: 210

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

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

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ISDA ASSOCIATE MEMBERSMarval OFarrell & Mairal Matheson Ormsby Prentice Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados Mayer Brown LLP McCann FitzGerald McCarthy Ttrault LLP McClure Naismith McDermott Will & Emery LLP McKee Nelson LLP McMillan Binch Meitar Liquornik Geva & Leshem Brandwein Meyer Lustenberger Attorneys-at-Law MF Global UK Limited Milbank, Tweed, Hadley & McCloy Misys Banking Systems Mitsui Company Moodys Investors Service, Inc. Moore & Van Allen PLLC Morgan, Lewis & Bockius Mori Hamada & Matsumoto Morrison & Foerster LLP Munsch Hardt Kopf & Harr, P.C. Nagashima Ohno & Tsunematsu NautaDutilh NetDelta LLC Newedge Group Nishimura & Asahi Nord Pool ASA Norton Rose LLP Novarum Risk Management UK Limited NS Solutions Corporation NTT Data Corporation OMelveny & Myers LLP ODL Securities Limited Oesa Limited Ogier Ogilvy Renault Oh-Ebashi LPC & Partners Olswang Omgeo Orrick, Herrington & Sutcliffe LLP Osler, Hoskin & Harcourt LLP Patton Boggs LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Pekin & Pekin Peltonen, Ruokonen & Itainen Oy Pillsbury Winthrop Shaw Pittman LLP Pinheiro Neto - Advogados Pinsent Masons Plesner Svane Grnborg, Law Firm PricewaterhouseCoopers Progress Software Purrington Moody Weil LLP Quick Corp. Radar Logic Incorporated Rating and Investment Information, Inc. Reed Smith LLP Reuters Richards Kibbe & Orbe LLP Ritch Mueller, S.C. Rojs, Peljhan, Prelesnik & Partners Ropes & Gray S.W.I.F.T. sc Salans LLP Sapient Schiff Hardin LLP SCHOENHERR RECHTSANWAELTE GMBH Schulte Roth & Zabel LLP Scrittura, Inc. Seward & Kissel LLP Shearman & Sterling LLP Shearn Delamore & Co. Shin & Kim Sidley Austin LLP Simmons & Simmons Simpson Thacher & Bartlett Singapore Exchange Limited SJ Berwin Skadden, Arps, Slate, Meagher & Flom Slaughter and May Soltysinski, Kawecki & Szlezak Sonnenschein Nath & Rosenthal LLP Standard & Poors Stikeman Elliott LLP Stroock & Stroock & Lavan LLP Sullivan & Cromwell SunGard Data Systems Inc. Sutherland, Asbill & Brennan LLP Taylor Wessing Teigland-Hunt & Associates LLP Thompson Hine LLP Thunderhead Ltd. TMI Associates Tokyo Financial Exchange (TFX) Tokyo Stock Exchange Group, Inc. Tradeweb Markets LLC Tradition (North America), Inc. Travers Smith TriOptima Troutman Sanders, LLP Tullett Prebon

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ISDA ASSOCIATE MEMBERSUria Menendez Abogados, S.L.P. Ustariz & Abogados Estudio Jurdico 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 Willkie, Farr & Gallagher LLP WilmerHale Winston & Strawn LLP Wistrand Advokatbyra WOLF THEISS Rechtsanwlte GmbH Womble Carlyle Sandridge & Rice, PLLC Wong Partnership Yigal Arnon & Co. Yulchon Zaid Ibrahim & Co. TOTAL ASSOCIATE MEMBERS: 290

ISDA SUBSCRIBER MEMBERSAareal 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 Bank of England The Bank of Fukuoka, Limited The Bank of Kyoto, Ltd. Bank of Lithuania Banque De France Banque et Caisse dEpargne de lEtat, 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 Dpts 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.

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ISDA SUBSCRIBER MEMBERSCapital 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 Man