The protocol provides for a standardized safe harbor approach to allow counterparties capable of making a comprehensive set of statements necessary to determine the applicability of a safe harbor to do so. The safe harbor application is entirely voluntary and both counterparties to an agreement covered by the protocol must agree on a safe harbor in their questionnaire so that the relevant DF schedule is incorporated into their arrangements. Partial safe harbour solutions are not provided for in the Protocol, as such partial solutions would not eliminate the need for a bilateral agreement outside the Protocol on whether and how a safe harbour should be applied. The objective of the Protocol is to allow swap dealers who are parties to covered waiver agreements to include in those agreements a division of responsibilities in accordance with a final preliminary rule of the CFTC for compliance with obligations arising from the CFTC`s Standards of Conduct for External Affairs published on April 30. ISDA, fxc (Foreign Exchange Committee) and FMLG (Financial Markets Lawyers Group) have developed Annex A to the Protocol, which provides for the division of responsibilities between two registered swap dealers, as provided for in the freedom of prosecution. 20.Q If I participate in the DF Protocol to supplement my existing written agreements by incorporating the provisions of the DF Supplement, is there a reason why I would also choose to enter into the DF Terms Agreement on the DF Protocol? The agreements which may be supplemented by the Protocol are referred to in the Protocol Convention as ”Agreements subject to a Protocol” (described in point 5.Q below). Other documents in the set of documents provided under the Protocol use more general terms (”Covered Agreement” or ”Agreement”) to facilitate their use in other contexts. However, the Protocol procedure may only be used to supplement agreements which are bound by agreements. [2] Rule 23.504(b)(4)(i) of the TCRC (requires that documentation between DSS and other DSDs/MSPs, financial institutions and other parties requesting such documentation include an agreement on the process for determining the value of each swap ”at any time” during the term of the swap in order to meet relevant margin and risk management requirements).
(a) The parties may execute swaps that are not covered by an existing ISDA framework agreement, an execution agreement (e.B. the AIF swap signing agreement) or any other written agreement between the parties (such swaps, ”undocumented swaps”), including swaps executed by a party to be cleared or swaps executed to be ”transferred” to an external derivatives dealer or a ”prime broker”, or the parties may enter into the agreement on the DF`s terms and conditions and choose the terms of the DF supplement, which they wish to include by participating in the ISDA-DF protocol of August 2012. A Party wishing to use the DF Protocol to fulfil the DF Conditions may do so in the same way as it uses the DF Protocol to supplement its existing written agreements, i.e. by exchanging questionnaires with another Protocol Participant who wishes to conclude an Agreement on the DF Terms. However, it should be noted that the relevant regulatory requirements do not require relevant parties to comply with a particular DF protocol. Rather, DF protocols are mechanisms created by ISDA to help stakeholders comply with regulations. Compliance can also be achieved by entering into bilateral amendment agreements that comply with regulatory requirements. Some DDs and MSPs have created such agreements and distributed them to the relevant counterparties. To the extent that material confidential information does not fall within the scope of an existing agreement between the parties (or in the absence of such an agreement), Article 2.15 establishes an agreement between the parties on the limitations and permitted uses of such information under the new regulatory standard.
Whether or not the parties have an existing agreement (and therefore fall under Article 2.14 or 2.15), they may, on a bilateral basis, accept any other condition that applies to the material confidential information they choose. The ISDA 2018 Benchmark Supplement Protocol was created to enable market participants to quickly and efficiently integrate the ISDA Benchmark Supplement into relevant transactions under existing framework agreements. [4] CFTC Rule 23.502 (requires (i) written agreements between SD/MSP and other SD/MSP on the conditions for participation in portfolio voting and (ii) SD/MSP policies and procedures for entering into written agreements on participation in portfolio voting with non-SD/MSP counterparties). Under the Protocol, Parties provide information and reporting to meet the new regulatory requirements for swap dealers. The protocol is intended to provide the parties with an effective and standardized method of meeting the new compliance requirements, rather than creating additional (and possibly unforeseen) contractual remedies under existing bilateral agreements. In addition, in some cases, the information provided under the Protocol is similar to the information currently provided by customers as part of a merchant`s onboarding process, which generally does not create termination rights under a framework agreement. Section 2.2 therefore provides that the parties do not have extensive termination rights on the basis of information or assurances provided solely through the Protocol. However, a Party making declarations and information under the Protocol should note that the other Party relies on these bases and may have other remedies under the law or treaty (including its framework agreement to the extent covered by provisions other than the Protocol).
4.Q What agreements are covered by the ISDA August 2012 DF Protocol? Like the other elements of the DF Protocol, the DF Terms Agreement distinguishes between the parties that make the declarations and agreements contained in the DF Supplement (these parties are referred to in the DF Terms Agreement as ”Principles of the DF Terms”) and the parties who may perform the DF Terms as representatives of those parties. The DF Terms Agreement is designed on the principle that the party that executes the DF Terms Agreement (whether through the DF Protocol or on a bilateral basis) is the party that can execute trades that fall under its terms. To deal with situations where an investment manager or other third-party agent makes swaps on behalf of a client, the agent concerned should execute the DF conditions as an agent for that party. To resolve situations where a party conducts trades on its own behalf, that party must enforce the DF Terms of Use. DF protocols are designed to allow swap participants to apply certain compliance provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (”Dodd-Frank”) to their swap business relationship. DF logs add notices, representations, and commitments that meet Dodd-Frank`s requirements and must be met at or before swap transactions are offered and executed. DF protocols are not limited to ISDA framework agreements and can be used to modify any agreement between two market participants under which they enter into swaps. As mentioned earlier, the questionnaire is the document that allows two adherent parties to modify a written exchange agreement between them. For a defence protocol to be effective for this Agreement, both Parties must complete and submit a questionnaire and specify that the other Party may have access to their questionnaire. If questionnaires have been exchanged between the Parties, the relevant agreement shall be deemed to have been amended by the terms of this DF Protocol.
It is possible for a member party to issue different questionnaires to different counterparties, but only one questionnaire may be given to a particular party […].