Overnight, the International Swaps and Derivatives Association,
Inc. (ISDA) published a new protocol called the ISDA
Illegality/Force Majeure Protocol"
(Protocol). The Protocol is designed to enable
parties to amend their 1992 ISDA Master Agreements to bring them
into line with the illegality/force majeure provisions in the 2002
ISDA Master Agreement.
Why publish the Protocol?
ISDA has been working with its counsel and a small discussion
group of members to understand the implications of an exit by a
member state from the Eurozone for the over-the-counter
(OTC) derivatives industry. Although ISDA has
stated that it considers the exit of a Eurozone member to be
unlikely, it believes that it would be prudent to plan for such an
outcome and to this end has been considering the steps that it
could take to help OTC derivatives market participants prepare for
such an event.
