In January 2014, the International Swaps and Derivatives Association (ISDA) published a draft amendment to Section 2(a)(iii) and we provided a summary of the proposed amendment at that time (available here).

On 19 June 2014, ISDA published a standard form amendment to the ISDA Master Agreement which inserts a time limit on the operation of that provision in circumstances where an Event of Default has occurred in relation to one of the parties. The amendment, along with an explanatory memorandum, is available to view or download from the ISDA Bookstore.

The final amendment substantively follows the draft of January 2014 but will now be located at either Section 2(f) of the 1992 ISDA Master Agreement or 2(e) of the 2002 ISDA Master Agreement rather than Section 6(g) as previously proposed.

What should I do next?

Market participants will need to decide if they want to adopt the proposed ISDA approach. If so, existing ISDAs will need to be amended and new ISDAs will need to incorporate the ISDA standard language.