New 2014 ISDA Credit Derivatives Definitions to Go into Effect — Protocol Adherence Period Open

On Aug. 21, 2014, the International Swaps and Derivatives Association (“ISDA”) published the 2014 ISDA Credit Derivatives Definitions Protocol (the “Protocol”) to permit parties to credit default swaps (“CDS”) to apply the 2014 Credit Derivatives Definitions (the “2014 Definitions”) to certain of their existing CDS governed by the ISDA 2003 Credit Derivatives Definitions (the “2003 Definitions”). ISDA adopted the 2014 Definitions in February 2014, and CDS trading using the 2014 Definitions is expected to begin on Sept. 22, 2014, the next quarterly “roll date” for traded CDS. By adhering to the Protocol, a party consents to the incorporation of the 2014 Definitions (subject to certain exceptions described in this Alert) in its CDS that are “Covered Transactions” governed by the 2003 Definitions with each of its counterparties that have also adhered to the Protocol. The Protocol is now open for adherence through Sept. 12, 2014, and a party may adhere to the Protocol on ISDA’s website; as discussed herein, market participants must decide whether to adhere to the Protocol prior to Sept. 12, 2014, because the 2014 Definitions may result in significant changes to CDS transactions that are currently governed by the 2003 Definitions.

This Alert provides a general overview of the 2014 Definitions and the Protocol and summarizes the implications of adherence to the Protocol.