On August 13, 2012, ISDA® launched its August 2012 Dodd-Frank Protocol, the first in a series of protocols aimed at assisting the over-the-counter (OTC) industry in implementing regulatory requirements under Title VII of the Dodd-Frank Act. The August Protocol is part of ISDA's Dodd-Frank Documentation Initiative, aimed at providing a standard set of amendments to ISDA documents to help update existing swap relationship documentation for Dodd-Frank compliance purposes. The August Protocol addresses the requirements of final Dodd-Frank rules on the following that will become effective shortly (see Legal Update, Compliance Dates for Dodd-Frank Swaps Rules Triggered by Publication of Swap Definitions):

However, the primary focus of the August Protocol is the final EBC rules.The Protocol allows market participants to:

The Protocol supplements the terms of written agreements by adding notices, representations and warranties, and covenants that are responsive to Dodd-Frank Title VII requirements and which must be in place before an individual swap transaction is offered and executed.

The Protocol may be used to amend all agreements, not just ISDA Master Agreements, between swap counterparties. The Protocol also contains additional bilateral delivery requirements, including a standardized questionnaire, to satisfy the "know your counterparty" information requirements under Dodd-Frank.

The questionnaires must be delivered to each relevant counterparty for the amendments and compliance with Title VII of Dodd-Frank to be effective. To help automate the information gathering process, ISDA and Markit have also launched "ISDA Amend," a Markit-built technology-based solution that will automate the information gathering process and allow agreements to be supplemented electronically(see Legal Update, ISDA and Markit to Propose Regulatory Compliance Solutions for Derivatives Documentation). Phase I of ISDA Amend allows parties to complete Part II, Sections 1 through 5 of the questionnaire. It was launched on August 13, 2012. Phase 2, which will allow parties to complete the remainder of the questionnaire, will be available on September 10, 2012. At that time, parties may begin delivering their questionnaires via ISDA Amend.

For step-by-step instructions on adhering to the Protocol, click here.

ISDA plans to launch more protocols to the extent future final Dodd-Frank swaps and derivatives rules may require documentation amendments. ISDA also expects that additional documentation changes may be necessary to account for possible legislative developments in other countries and regions, including under EMIR, MiFiD and MiFIR.

The Protocol is open to both ISDA members and non-members. Parties must pay a one-time fee of $500 to adhere to the Protocol. The Protocol will remain open until ISDA designates a closing date. ISDA reserves the right to designate a cut-off date by giving 30 days' notice on its website.

To learn more about the Protocol, see ISDA's FAQs.

The full complement of Protocol information and instructions can be found at the links below:

For more information on EBC standards for swap dealers and MSPs, see US Derivatives Regulation: Requirements for Swap Dealers and MSPs Checklist and US Derivatives Regulation: External Business Conduct (EBC) Rules for Swap Dealers and MSPs.

For detailed information on ISDA protocols, as well as ISDA documentation generally, see Practice Notes, ISDA Documents: Overview (US) and ISDA documents: overview (UK).