Foreword 5
Part I. Overview of Credit Derivatives
Introduction to credit derivatives 7
Types of credit derivative products used with the 2014 ISDA Credit
Derivatives Definitions 31
Single Name Credit Default Swaps 71
Index Credit Default Swaps 101
Part II. Overview of the 2014 ISDA Credit Derivatives
Definitions
Differences between the 117 2003 and 2014 ISDA Credit Derivatives
Definitions 117
Overview of the 2014 ISDA Credit Derivatives Definitions 175
Part III. 2014 ISDA Credit Derivatives Definitions in detail
Introduction, preamble 251
and Article I – Certain General Definitions
Article II – Terms Relating to the Reference Entity and the
Reference Obligation 283
Article III – Terms Relating to Obligations and Deliverable
Obligations 307
Article IV – Credit Events 337
Article V – General Terms Relating to Settlement 349
Article VI: Terms Relating to Auction Settlement 353
Article VII – Terms Relating to Cash Settlement 363
Article VIII – Terms Relating to Physical Settlement 381
Article IX – Fallback Provisions Applicable to Physical Settlement
397
Article X – Effect of DC Resolutions 411
Article XI – Additional Representations and Agreements of the
Parties 415
Article XII – Initial Payment Amount, Fixed Amounts and Floating
Rate Payer Calculation Amount 421
Article XIII – Credit Derivatives Physical Settlement Matrix
431
Article XIV – Non-Standard 437
Event Determination Date and Non-and Non-Standard Exercise Cut-off
Date 437
Part IV. Ancillary Topics
Supporting documentation and Supplements to the 2014 Definitions
443
The ISDA Credit Derivatives Determinations Committees, DC Rules,
SRO Rules and POB Rules 459
Credit Derivatives Auction 519
Settlement Terms
About the author 551
Mr Parker ably achieves this goal [of creating a better
understanding of credit derivatives products] through a combination
of lucid prose, well organized charts and helpful examples.
*Bank Lawyers Blog*
It takes courage and much energy for a practicing corporate lawyer
to write a legal treatise. The decision to take time away from a
thriving law practice, or to spend precious leisure time, to
develop a law book is a difficult one. Never taken lightly, and
perhaps often regretted before the work is done, or so I imagine.
Query, then: How best to describe the author of a second edition of
a legal monograph? Is that lawyer: (A) a glutton for punishment,
(B) a fool in search of the Holy Grail of greater writer's
royalties, (C) a lawyer with too much idle time (or too many
under-utilized supporting colleagues), or (D) all of the above? In
the case of Edmund Parker, a partner in and the global head of the
Derivatives and Structured Products practice of the law firm Mayer
Brown LLP, the answer to the question is a resounding "None of the
above!"
Ed's new book, 'Credit Derivatives: Understanding and Working with
the 2014 JSDA Credit Derivatives Definitions', makes a great
contribution to the literature of financial law and deserves a
place on the bookshelf of any lawyer working in the domain of
credit derivatives. As Ed points out in his Foreword, the global
financial crisis of 2007-08 followed hard on the heels of the
publication of his first book on this topic 1. and profoundly
altered the landscape of the over-the-counter credit derivatives
markets. The ensuing period of marketplace reaction 2. and
regulatory intervention brought a shift to the patterns of contract
documentation and the processes of working with the documents after
trades had been struck that was nothing short of seismic. Ed's new
book brightly illuminates the shift and provides helpful narrative
guidance to lawyers seeking a firmer grasp of this important field
of financial law. As was its predecessor, the book is divided into
four parts. Part I, like its older sibling, describes the
commercial context in which the ISDA definitions are employed. Part
I provides many detailed examples of complex structured credit
products and is useful in getting behind the buzzwords and acronyms
with which this part of finance is particularly rife. Part II,
similarly, introduces the important (and significantly changed)
features of the definitions. However, Part II helpfully stops to
pause after describing the key changes made by the 2014 ISDA Credit
Derivatives Definitions to their 2003 forerunner and providing a
high-level (but still 70-plus-page) overview of the definitions 3.
Part III of the new book continues down this path, with a
section-by-section review of the pro-visions of the new ISDA
definitions, completing in this respect the task of Part II of its
predecessor. Part IV ("Ancillary Topics") departs from the tracks
laid down in the first edition, instead summarizing the most
important provisions of certain texts which, while outside the 2014
ISDA Credit Derivatives Definitions themselves, are nonetheless
fundamental to understanding and using the definitions in live
credit derivative products. These are the rules governing the
all-important ISDA Credit Derivatives Determinations Committees
("DCs") and the determination of Standard Reference Obligations
("SROs") and Package Observable Bonds ("POBs"). What did I just say
about acronyms?
At just over 550 pages, this is not a short book 4. It treats in
considerable detail, with both historical and hypothetical
examples, a subject that is at times counterintuitive and
perplexing-and one that has changed dramatically in a very short
period. I was impressed not only with the large scale of this work
but with its command over the subtle nuances of the texts it
purports to explain. I fully expect and intend to use this book in
my own practice. The book would benefit greatly from the addition
of a topical index. Future editions of the book would also benefit
from summaries of the growing body of Jaw arising out of litigation
of credit derivatives disputes in the U.S. state 5. and federal 6.
courts. But these complaints are not about fatal flaws. I heartily
endorse this important treatise and look forward eagerly to reading
future editions of it.
1. Credit Derivatives: Documenting and Under-standing Credit
Derivative Products. London: Globe Business Publishing Ltd., 2008.
Reviewed in this publication by my now retired law partner Robert
D. Aicher. 28 Futures & Derivatives Law Rpt., Issue 8, p. 22
(September 2008).
2. This began with private sector efforts to bring order to a
product line that had clearly outgrown the two-party contract model
in which it had its origins. 3. In the author's Foreword, Ed writes
that the overview "is designed to be read through in a single go."
I tried this and I agree that it's a good way to approach this
material. 4. This is not intended as criticism of the editing
process or of the author's capacity for word economy. Its forebear
was seven pages longer and had less subject matter to cover. 5.
See, e.g., Good Hill Master Fund L.P. v. Deutsche Bank AG, 2017
Slip Op. 00428 (decided January 24, 2017, Appellate Division, First
Dept.). 6. See, e.g., Merrill Lynch International v. XL Capital
Assurance Inc., 564 F.Supp.2d 298 (SDNY 2008).
*Futures & Derivatives Law Report*
Yet for the practitioner, or, indeed, the legal researcher, there
are precious few books that explain the legal design and
documentation of credit derivatives. One such rare example is
Edmund Parker’s Credit Derivatives: Understanding and Working with
the 2014 ISDA Credit Derivatives Definitions.1 As readers of this
journal will be aware, all credit derivatives, including those
linked to staged credit events, are constructed using industry
standard form contracts, and that book is an invaluable guide to
the negotiation and drafting of those contracts.
*Company and Securities Law Journal*
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