ISDA has selected new CDS determinations committee (DC) members. DC members make important determinations for the CDS market, including whether a credit event has occurred with respect to a particular reference entity.
On March 31, 2015, ISDA® announced its selection of new credit default swap (CDS) determinations committee (DC) members. DC members make important determinations for the CDS market, including when a credit event has occurred with respect to a particular reference entity. DCs are necessary because it is not always clear when a credit event has occurred under a CDS.
Under a CDS, if a credit event is deemed to have occurred with respect to the reference entity (a third party), credit protection payments under the swap must be made from the credit protection seller to the credit protection buyer. Common credit events include bankruptcy of the reference entity or failure to pay under a debt instrument issued by the reference entity (the reference obligation).
For example, when a lender and borrower enter into a forbearance agreement, it is often unclear if a failure to pay has occurred. Additionally, during the Greek debt crisis, it was not clear whether or not a credit event had occurred with respect to Greece, which was named as a reference entity in certain sovereign CDS. The DC makes these determinations, upon request by market participants.
"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.