Each Party that complies with the Protocol shall select the annexes it intends to apply between it and the other acceding Parties with which it has concluded or intends to conclude a Master 2002. Insofar as the selection of two Contracting Parties coincides, the provisions selected shall apply between those two Parties if they use the relevant documents from the period prior to 2002 in conjunction with a Master`s degree from 2002. The provisions do not apply if the relevant documents from the period before 2002 are used in conjunction with any other form of agreement between them, including a 1992 master`s degree. Does participation in the 2002 Framework Agreement Protocol affect the 1992 ISDA Framework Agreements? In addition to the topics discussed, the particularity of the 2002 Framework Memorandum of Understanding is that it is forward-looking. All previous ISDA protocols were designed to make only changes to framework agreements (or, in one case, credit documents) that had already been concluded between the parties. The new protocol would be of limited use if it did nothing more, because the universe of the Masters conducted in 2002 remains relatively small. The protocol therefore looks to the future and takes into account both the fact that some market players have not yet completed a Master 2002 and the fact that even those who have already enrolled in a Master 2002 will enter more in the future. Any legal person which has concluded a 2002 framework agreement or which considers that it could conclude a 2002 framework agreement in the future must comply separately in its own capacity if it wishes to accede to the Protocol. The Protocol does not provide for compliance with the law by a separate group of legal persons.
For any market participant wishing to use pre-2002 documents with a 2002 framework agreement (now or in the future), the alternative to compliance with the protocol is to include the various issues in the list accompanying each 2002 framework agreement it has concluded and possibly in any confirmation of a transaction that is the subject of such a 2002 framework agreement; and in any credit support document relating to such a 2002 framework agreement. Problems could be solved by individually negotiated provisions or by the inclusion of relevant provisions of the Protocol by reference. In both cases, however, bilateral negotiations would be required, which could be time-consuming and therefore costly. The protocol does not provide for changes to confirmations based on one of ISDA`s long confirmation models, as these confirmations not only contain standard sets of definitions and provisions, but are self-contained and vary the types of provisions that lead to the problems addressed in the protocol rather than confirmations based on ISDA`s abbreviated confirmation templates. However, Parties using such confirmations under a 2002 Framework Agreement may wish to consider issues similar to those addressed in the Annexes to the Protocol. For example, paragraphs 7 (b) (v) (B) and (C) of the long FORM ISDA “Confirmation of the OTC credit swap transaction a single non-sovereign reference entity” refer to the quotation and loss of the market. The 2002 Framework Agreement Protocol, published in July last year, is the latest member of the ISDA family of protocols. ISDA began drafting protocols in 1998 when it published its Protocol on European Monetary Union, to which more than 1,100 market participants have acceded.
The issues dealt with may be different, but the common feature of the protocols is the multilateral mechanism they provide. This mechanism allows a Party to address certain issues between itself and all other signatories to the Protocol in a single simple act, saving time and costs that would otherwise have to be spent on multiple bilateral negotiations. The Protocol reflects an innovative procedure which makes it possible to consider as having made various standardised amendments to one or more documents from the period prior to 2002 when those documents are used in the context of a 2002 framework contract. It is based on the principle that the parties may agree with one or more other parties that certain terms and conditions apply now and/or in the future to their respective relationships (unless they expressly agree otherwise). The Protocol is addressed to all types of participants in OTC derivatives markets, including (but not limited to) banks, corporations, governments, investment firms, insurance companies, pension funds and other fund units, partnerships and individuals who entered into a framework agreement in 2002 or who plan to enter into a framework agreement in 2002 in the future. .