ISDA 2015 Universal Resolution Stay Protocol

Open from November 12, 2015

The International Swaps and Derivatives Association, Inc. (ISDA) has published the ISDA 2015 Universal Resolution Stay Protocol (ISDA 2015 Universal Protocol) which enables parties to amend the terms of their Protocol Covered Agreements to contractually recognize the cross-border application of special resolution regimes applicable to certain financial companies until comprehensive statutory regimes are adopted and to support the resolution of certain financial companies under the United States Bankruptcy Code.

The ISDA 2015 Universal Protocol was developed by a working group of ISDA member institutions (including buy-side and sell-side institutions), in coordination with the Financial Stability Board.  It is a major component of a regulatory and industry initiative to address “too big to fail”.

ISDA also developed the ISDA 2014 Resolution Stay Protocol (ISDA 2014 Protocol). The ISDA 2015 Universal Protocol, replaces the ISDA 2014 Protocol in its entirety for those parties that adhere to it.  Adherence to the ISDA 2014 Protocol is closed. The operative provisions of the ISDA 2015 Universal Protocol are nearly identical to the ISDA 2014 Protocol. One substantive addition is that the International Capital Market Association (ICMA), International Securities Lending Association (ISLA) and Securities Industry and Financial Markets Association (SIFMA), in consultation with ISDA, developed an annex that expands the ISDA 2015 Universal Protocol to cover certain securities finance master agreements.

While any entity may adhere to the ISDA 2015 Universal Protocol, it is expected that the buyside generally will not adhere to the ISDA 2015 Universal Protocol, but instead to the ISDA Resolution Stay Jurisdictional Modular Protocol (ISDA JMP), which is available here. Please consult with your regulator and take legal advice before adhering.

The ISDA JMP is aimed at achieving the same policy goals as the ISDA 2015 Universal Protocol with respect to the orderly resolution of systemically important financial institutions. While the ISDA 2015 Universal Protocol was developed in advance of regulations requiring certain parties to contractually recognize the SRRs applicable to their counterparties, the operative provisions of the ISDA JMP are to be developed to facilitate compliance with the specific legislative or regulatory requirements in different jurisdictions.  Nevertheless, the operative provisions of the ISDA JMP are aimed at achieving substantially similar outcome to Section 1 of the ISDA 2015 Universal Protocol, which results in counterparties to financial institutions consenting to be subject to stays on or overrides of certain termination rights under SRRs, notwithstanding the governing law of their agreements.

Please refer to the “Frequently Asked Questions” below for more information on the background and substance of the ISDA 2015 Universal Protocol.

The ISDA 2015 Universal Protocol is open to ISDA members and non-members. Parties will pay a one-time fee of $1,000 to ISDA for the Initial Adherence letter to the ISDA 2015 Universal Protocol and an annual update fee for subsequent adherence to Country Annexes ($500 per year from 2016 regardless of the number of Country Annexes published).  The Other Agreements Annex is free to adhere to at any time.

There is no cut-off date to the ISDA 2015 Universal Protocol. ISDA does, however, reserve the right to designate a cut-off date by giving 30 days’ notice on this site.