Press Release
New York Fed Welcomes CDS Auction Hardwiring
March 12, 2009
NEW YORK—The Federal Reserve Bank of New York welcomes the actions today to improve the market infrastructure for credit default swaps (CDS). The International Swaps and Derivatives Association (ISDA) published documentation which will "hardwire" an auction-based settlement mechanism into standard CDS documentation, mandating its use in future CDS credit events. Market participants will be able to sign on to the documentation during an adherence period which ends on April 7.

The New York Fed, along with other supervisors involved in OTC market improvement efforts support the permanent incorporation of the auction-based mechanism in order to increase the certainty, transparency and orderliness of settling CDS transactions following a credit event. Supervisors encourage all market participants to adopt the new standard before the April 7 deadline.

Supervisors will continue to monitor progress and encourage further efforts to improve the infrastructure of the OTC derivatives market.

March 12, 2009 ISDA news release offsite

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