Derivatives in Review, April 2016


The Derivatives in Review highlights important legal, regulatory and other developments in the area of derivatives.

Novo Banco and CDS – A Post-Mortem

The 2014 ISDA Credit Derivatives Definitions updated the previous set of credit derivatives definitions to, among other things, include a credit event for “Governmental Intervention.” It did not take long for this new credit event to be probed and tested by the application of resolution measures to Banco Espírito Santo, S.A. by Banco de Portugal. Read more.

ISDA Publishes 2016 Variation Margin Credit Support Annex (NY Law)

On April 14, 2016, the International Swaps and Derivatives Association, Inc. published the 2016 Variation Margin Credit Support Annex (New York Law).  The purpose of this document is to facilitate compliance with margin requirements for non-cleared derivatives scheduled to be phased in shortly in the United States. Read more.

Trade Options: Recent End-User Developments

On March 16, 2016, the CFTC approved a final rule eliminating certain reporting and recordkeeping requirements for “trade option” counterparties that are neither “swap dealers” nor “major swap participants.” Read more.

Natural Gas and Electric Power Contracts: Recent End-User Developments

On April 4, 2016, the SEC and the CFTC jointly issued guidance preliminarily concluding that certain electric power capacity contracts and certain natural gas supply contracts constitute “customary commercial arrangements” and, as such, should not be considered “swaps” under the Commodity Exchange Act, as amended by the Dodd-Frank Act. Read more.