Qualified Financial Contracts: New QFC Stay Rules Affecting Banks and Their Counterparties

Pros and Cons of Adhering to ISDA Protocol vs. Bilateral Amendment

This program has been cancelled

A live 90-minute premium CLE webinar with interactive Q&A


Wednesday, May 15, 2019

1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE webinar will examine the new federal rules regarding qualified financial contracts (QFCs) and the steps banks and other financial institutions should take now to comply with the new QFC rules. The panel will discuss the pros and cons of adopting the ISDA US Stay Protocol as opposed to entering into bilateral amendments of existing contracts as well as provisions that should be included in QFCs going forward.

Description

In the fall of 2017, the Federal Reserve, FDIC and Comptroller of the Currency promulgated new rules which require U.S. global systemically important banking organizations (GSIBs) to amend QFCs, including securities contracts, swaps and other types of derivatives, to include provisions that limit their counterparties' default and termination rights and permit such QFCs to be assigned in certain circumstances. Compliance deadlines are fast approaching. Counsel to banks and their counterparties must be prepared to respond.

To address the new QFC rules, ISDA published the 2018 protocol, an industry standard document which permits parties that adhere to it to amend their covered QFCs to include the necessary provisions. Parties that adhere to the 2018 protocol do so on a "universal" basis, which means that they agree to amend all of their covered QFCs with every covered entity.

Alternatively, the parties to a QFC can comply with the new rules by entering into a bilateral amendment, which binds only those parties concerning their own QFCs. ISDA has prepared bilateral templates that GSIBs and their counterparties can use to satisfy the new requirements. But the safe harbored 2018 protocol provisions contain certain creditor protections, particularly in the event of the insolvency of an affiliate of a covered entity, that are not available under bilateral amendments.

Listen as our authoritative panel analyses the new rules regarding QFCs, including what constitutes a GSIB and which QFCs will require amendment and deadlines for compliance. The panel will discuss options available to GSIBs and their counterparties to amended their QFCs and the pros and cons of each.

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Outline

  1. Background on the new QFC rules--protection of GSIBs
  2. Key provisions
    1. Covered entity and covered QFC defined
    2. Required amendments
    3. Exclusions
    4. Deadlines for compliance
  3. ISDA Protocol
  4. Compliance methods
    1. Adherence to ISDA Protocol
    2. Bilateral amendment

Benefits

The panel will review these and other key issues:

  • How is "Covered QFC" defined under the new QFC rules?
  • What amendments are required with regard to QFCs with GSIBs and other covered entities?
  • What are the exemptions with regard to U.S. counterparties?
  • What are the pros and cons of adhering to the ISDA Protocol as opposed to entering into bilateral amendments?

Faculty

Yurke, Alice
Alice F. Yurke

Partner
Dentons

Ms. Yurke's practice covers registered and unregistered structured and derivatives products, including equity and...  |  Read More

Additional faculty
to be announced.