Joint Release/Federal Reserve Board and FDIC Welcome ISDA Announcement — 2014-10-11

Board of Governors of the Federal Reserve System Joint Release Federal Deposit Insurance Corporation Federal Reserve Board and FDIC Welcome ISDA Announcement The Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation welcome the announcement today by the International Swaps and Derivatives Association (ISDA) of the agreement of a new resolution stay protocol. A significant portion of bilateral, over-the-counter (OTC) derivatives transactions with large banking organizations permit counterparties to liquidate, terminate, or accelerate the contract upon the banking organization's failure. Following the recent financial crisis, global financial regulators have focused on the potential for such contractual rights to disrupt the execution of an orderly resolution of a major global banking firm. This initiative is an important step toward mitigating the financial stability risks associated with the early termination of bilateral, OTC derivatives contracts triggered by the failure of a global banking firm with significant cross-border derivatives activities.