ISDA® Publishes 2013 Discontinued Rate Maturities Protocol | Practical Law

ISDA® Publishes 2013 Discontinued Rate Maturities Protocol | Practical Law

ISDA recently published a protocol designed to help adhering parties amend the terms of their ISDA Master Agreements to address future rate discontinuations where longer and shorter maturities remain for a discontinued rate.

ISDA® Publishes 2013 Discontinued Rate Maturities Protocol

Practical Law Legal Update 4-546-0947 (Approx. 3 pages)

ISDA® Publishes 2013 Discontinued Rate Maturities Protocol

by Practical Law Finance
Published on 21 Oct 2013 • USA (National/Federal)
ISDA recently published a protocol designed to help adhering parties amend the terms of their ISDA Master Agreements to address future rate discontinuations where longer and shorter maturities remain for a discontinued rate.
On October 11, 2013, ISDA® published the ISDA 2013 Discontinued Rates Maturities Protocol (DRM Protocol) and related documents. The DRM Protocol enables adhering parties to amend the terms of Protocol Covered Transactions to address future rate discontinuations where longer and shorter maturities remain for a discontinued rate. Specifically, the DRM Protocol applies to transactions where a Floating Rate Option provider ceases to publish one or more maturities for the Option, but continues to publish maturities which are longer and shorter than the discontinued maturity. Parties can amend their transaction terms so that the rate will be determined by comparing the nearest short rate and nearest long rate to the discontinued rate for the Floating Rate Option.
The DRM Protocol contains provisions that describe:
  • The process of how a party can adhere to the DRM Protocol.
  • The representations of the DRM Protocol's adhering party, including those related to its ability and power to enter into the DRM Protocol and whether it adheres to the ISDA Master Agreement or a similar master agreement.
  • Miscellaneous provisions related to the ability of:
    • the adhering party to amend the DRM Protocol in accordance with the governing master agreement and to enter into separate bilateral agreements to exclude certain Protocol Covered Transactions; and
    • the agent of an adhering party to adhere to the DRM Protocol on behalf of a client.
  • The definitions of the DRM Protocol's relevant terms, including the terms "Protocol Covered Transactions," "Discontinued Maturity Rate," "Nearest Long Rate" and "Nearest Short Rate."
In addition to the DRM Protocol, ISDA published the following supporting material and resources:
"ISDA" is a registered trademark of the International Swaps and Derivatives Association, Inc. (ISDA). ISDA is not a sponsor of Practical Law and had no part in the development of this resource.