The International Swaps and Derivatives Association (ISDA) is publishing a new protocol to assist derivatives counterparties with their Eurozone contingency planning. The issue addressed by the protocol, which was issued in pre-publication form on June 19, is the absence in the 1992 form of ISDA master agreement of the same type of force majeure and illegality provisions that are found in the standard text of the 2002 version of the ISDA master. These provisions are expected to be helpful in a Eurozone financial crisis that effects the use of the Euro in derivative transactions. The protocol is a multilateral contractual amendment mechanism that enables an adhering party to amend its 1992 masters to incorporate those provisions with a minimum of difficulty so long as its counterparties also adhere to the protocol.
The protocol will be open shortly for a defined adherence period after final publication. Parties adhere by sending a prescribed form of adherence letter to ISDA.
The full text of the pre-publication version of the protocol can be found here. A full list of ISDA protocols can be found here.