Hardwiring protocol (hardwiring)

Hardwiring is the concept of making credit event auctions the standard form of credit event settlement in credit default swaps. Credit event auctions, run by Creditex and Markit, have been used since the default of Collins & Aikman in 2005. However, until the hardwiring supplement was introduced in April 2009, auction settlement was incorporated into documents on an ad hoc and voluntary basis, through a series of one-off settlement protocols.

The hardwiring protocol (properly, the Isda credit derivatives determinations committees and auction settlement supplement to the 2003 ISDA credit derivatives definitions) forms part of all new standard credit default swaps from April 2009. It means that following a credit event, the price of the defaulted obligation will be determined by the credit event auction.