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The International Swaps and Derivatives Association, Inc (ISDA) and the Futures and Options Association (FOA) today announced the launch of the ISDA/FOA Client Cleared OTC Derivatives Addendum.
The ISDA/FOA Client Cleared OTC Derivatives Addendum is a template for use by cleared swaps market participants to document the relationship between a clearing member and its client for purposes of clearing over-the-counter derivatives transactions across central counterparties (CCPs) that use the principal-to-principal client clearing model.
The Addendum, which is published jointly by ISDA and the FOA, is designed to be a supplement to an ISDA Master Agreement or FOA futures and options agreement. ISDA will shortly publish a form of Paragraph 11 to the English Law Credit Support Annex that can be used with the Addendum, to be followed by a form of Paragraph 13 to the New York Law Credit Support Annex.
“ISDA is committed to securing safe and efficient markets for all users of OTC derivatives products. The publication of the Client Cleared OTC Derivatives Addendum is further testament to that commitment as ISDA continues to develop tools to assist market participants to comply with new and evolving regulatory requirements”, said Robert Pickel, ISDA Chief Executive Officer.
Anthony Belchambers, Chief Executive Officer of the FOA, stated that “without standard industry OTC clearing documentation, clients would be obliged to sign up to prescribed terms with each CCP separately. The ISDA/FOA Addendum facilitates OTC client clearing through all the major CCPs under existing terms of business (ISDA Master or F&O Clearing Terms) thus obviating the need to negotiate separate sets of terms for each clearing solution.”