Excerpt: The private sector initiatives that have been launched in response to issues raised by regulators over the last year are changing the way the credit derivatives markets operate and are giving these markets a vital and timely face lift. Specifically, these undertakings have led to the development of standard procedures for transferring (or “novating”) credit derivative trades in reliance on a “Novation Protocol” published by the International Swaps and Derivatives Association, Inc. (ISDA)
Excerpt: The growth of the over-the-counter energy markets can be attributed in no small part to the development of standardized documentation for physical energy trading. These documents not only provide market participants with sophisticated tools for documenting and tailoring transactions to their needs but also have led to greater market liquidity by ensuring that products are traded on consistent terms, thereby enhancing fungibility.
Excerpt: Kenneth Raisler and Lauren Teigland-Hunt examine ISDA’s Novation Protocol and its impact on the credit derivatives market… “The Novation Protocol amendments were developed to address the challenges in the processing of novations that were contributing to confirmation backlogs with respect to both credit and interest rate derivative transactions.”