The International Swaps and Derivatives Association, Inc. has successful implementation of its new settlement protocol for credit default swap (CDS) transactions, the association said Wednesday.

It reports that over 2,000 parties adhered to the so-called “big bang” protocol, which represents the final step in the process known as “hardwiring”, involving the incorporation of auction settlement terms into standard CDS documentation. The ISDA says that these reforms, in combination with the changes in market practice that support standard coupons for CDS, will introduce greater certainty to transactional, operational and risk considerations for treatment of CDS.

“The successful implementation of our ‘big bang protocol’ constitutes a major achievement for ISDA and for the industry,” said Robert Pickel, executive director and chief executive officer of the ISDA. “Hardwiring is central to the many improvements ISDA and the industry are making in the ongoing refinement of practices for the efficient, liquid and transparent conduct of the CDS business. In adapting a tactical solution, ISDA has helped develop a strategic direction for the industry.”

“This is an excellent example of the entire industry pulling together with the regulatory community to benefit the soundness and integrity of the product,” said David Geen, general counsel, ISDA.

IE