Cadwalader Advises ISDA on Variation Margin Protocol

August 17, 2016


Mark Fellin
New York
+1 212 993 4600

Cadwalader served as counsel to the International Swaps and Derivatives Association, Inc. (ISDA) in the development of a new Protocol aimed at helping market participants comply with the variation margin requirements that come into force in March next year.

The ISDA 2016 Variation Margin Protocol enables market participants to efficiently put contractual documentation in place with multiple counterparties. This will allow them to meet the mandates under four different regulatory regimes (CFTC, US prudential regulators, EU, and Japan). The regulations are expected to have an impact on tens of thousands of derivatives contracts.

Cadwalader also served as counsel to ISDA in publishing a series of margin-rule-compliant documents in the months leading up to the launch of the Protocol, including the 2016 Credit Support Annex for Variation Margin (2016 VM CSA) and the 2016 Phase One Credit Support Annex for Initial Margin (2016 IM CSA).

The margining framework for non-cleared derivatives was developed by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions, and will become effective for the largest derivatives users beginning September 1, 2016. Variation margin requirements for other covered entities will become effective as of March 1, 2017, while initial margin requirements for other covered entities will be phased in over a four-year period.

The Cadwalader team representing ISDA on this project is headed by Lary Stromfeld and includes other attorneys in Cadwalader's Financial Services Department.