Isda sets March deadline for hardwiring

Isda announced last week that it aims to complete "hardwiring" - the incorporation of auction-based setttlement into credit default swap documentation by mid-March 2009. As reported in the current issue of Creditflux, see Busy dealers scrap year-end cash settlement target, the original end of 2008 dealine was thrown off course by the workload of new credit events, the failure of Lehman Brothers and last year's general market disruption.

The OTC derivatives industry body says that it has agreed with regulators that the auction supplement will be published in early March, along with a "big-bang" protocol which will adopt the new language for all existing trades. This will be followed by a two-week adherence period.

The process will involve setting up a new body known as the Isda determinations committee which will rule on whether a credit event has taken place whether or not there should be an auction and what obligations are eligible for delivery. The Isda statement does not give details of what form this committee will take.