On March 12, 2015, ISDA® published a statement regarding negative interest rates and the ISDA 2014 Collateral Agreement Negative Interest Protocol. The ISDA statement noted that more than 220 legal entities from the dealer and end-user communities have signed the protocol. In the statement, ISDA noted that negative interest rates have become increasingly common and expressed its support for the use of market rates, whether positive or negative, for over-the counter (OTC) derivatives transactions.

The protocol allows parties to amend collateral agreements in circumstances where negative interest rates may be payable. The amendments set out in the protocol make it clear that a party pledging cash collateral would pay interest to the collateral receiver in the event of negative interest rates, by paying the "absolute value" of the applicable interest amount for that interest period. Normally, this interest is paid to the pledgor by the secured party on pledged collateral. For more information on the ISDA 2014 Collateral Agreement Negative Interest Protocol, see Legal Update, ISDA 2014 Collateral Agreement Negative Interest Protocol Published.