Release Date: November 12, 2015
Contact: Liz Pierce, 212-313-1173, [email protected]  

SIFMA and Other Associations Announce New SFT Annex to the ISDA 2015 Universal Resolution Stay Protocol  

New York, N.Y., November 12, 2015 – SIFMA today announced the publication of a Securities Financing Transaction Annex (“SFT Annex”) that forms part of the ISDA 2015 Universal Resolution Stay Protocol (“Protocol”) that was also published today. The SFT Annex, developed jointly by SIFMA, the International Capital Market Association (“ICMA”) and the International Securities Lending Association (“ISLA”), in coordination with ISDA and the Financial Stability Board, expands the parameters of the original November 2014 ISDA Resolution Stay Protocol (“2014 Protocol”) to include securities financing transactions documented under certain securities financing master agreements sponsored by SIFMA, ICMA and ISLA.   

The 2014 Protocol was voluntarily signed by 18 major banks and certain of their subsidiaries in November 2014. The revised Protocol has been signed at launch by 21 banking groups categorized as systemically important. It is expected other systemically important banks will sign the Protocol over time.   

The SFT Annex will enable adhering parties who use securities finance master agreements sponsored by the trade associations to comply with forthcoming regulations requiring the recognition of bank resolution stays in cross border contractual arrangements. These stays are intended to give regulators time to facilitate an orderly resolution of a troubled bank.   

Specifically, the SFT Annex opts adhering parties into certain existing and forthcoming special resolution regimes which provide for temporary stays on early termination rights in the event a bank counterparty enters into resolution. Regulators are in the process of developing new regulations in their jurisdictions that will promote broader adoption of the stay provisions beyond the current adhering parties. Those regulations will be made under the rule-making process in each jurisdiction.   

In addition, a separate Protocol is being developed for other market participants, including buy-side and end-user firms and other banks, providing them with a tool to comply with forthcoming regulations requiring the inclusion of stays within financial contracts. The separate Protocol will be published next year for those firms that choose to use it. Regulations requiring financial contracts to incorporate contractual stays are expected to be implemented in several jurisdictions from early 2016.    

Kenneth E. Bentsen, Jr., SIFMA president and CEO, said, “Regulators have prioritized resolution stays in their efforts to promote financial stability. SIFMA is committed to providing our members’ expertise and insight to this proactive industry effort to develop workable protocols that support forthcoming regulatory requirements.”

 

SIFMA also issued a statement from its Asset Management Group, which is available here.