ISDA will develop an industry-wide notices hub, it has announced, following support from global buy- and sell-side institutions on the endeavour.
Currently, under the ISDA Master Agreement, termination-related notices must be delivered under particular prescribed methods – including physical delivery. However, if company address details have been changed or physical delivery is possible, users risk considerable losses.
The new secure, central, online platform will provide immediate delivery and receipt of critical termination-related notices, with automatic alerts sent to the receiving entity. Market participants will be able to update their physical address details through a single entry, with the platform accessible by multiple designated individuals at each firm regardless of geographical location.
The implementation of the service will reduce the risk of uncertainty and potential losses for both senders and recipients of the notices, ISDA stated.
Free for buy-side users and available through S&P Global Market Intelligence’s Counterparty Manager platform, ISDA aims to implement the service in 2025. S&P Global Market Intelligence and Linklaters will participate in the platform’s construction, drafting the necessary documentation and commissioning legal opinions in priority jurisdictions to confirm the validity of delivering notices through a central hub.
ISDA launched an industry outreach initiative on the hub in April 2024. Of those who answered that they would use the data hub in theory, 57% were from buy-side institutions. Two thirds of those in the ‘global primary leadership’ category responded in kind.
Commenting on the announcement, Scott O’Malia, ISDA’s CEO, said: “We’re delighted that so many financial institutions recognise the benefit of having a secure digital platform that allows termination notices to be delivered and received in the blink of an eye. As well as increasing certainty for users, the ISDA Notices Hub will eliminate risk exposures and potential losses that can result from delays in terminating derivatives contracts.”
©Markets Media Europe 2024
