The Financial Stability Board (FSB) has issued a press release welcoming the announcement by the International Swaps and Derivatives Association (ISDA), the Securities Industry and Financial Markets Association, the International Capital Market Association and the International Securities Lending Association concerning the execution by 21 global systemically important banks (G-SIBs) of a revised ISDA Resolution Stay Protocol (the Protocol).
The Protocol builds on the version developed in 2014, which focused on amending the ISDA Master Agreements for over-the-counter (OTC) bilateral derivatives to improve the effectiveness of cross-border resolution actions.
Under the Protocol, counterparties agree to the cross-border enforceability of existing statutory stays on resolution-related early termination and other default rights in OTC bilateral derivatives contracts and securities financing agreements.
The scope of the Protocol has now been extended to cover securities financing agreements and an additional four G-SIBs adhering to the revised Protocol.
As a result of the extension of the Protocol to securities financing transactions and its adoption by G-SIBs, it has been estimated that more than $560bn of cross-border securities financing activity that could previously have been terminated at the point of resolution will be subject to the stay regimes of relevant G-SIB home jurisdictions.