ISDA To Discuss Swaps Revisions

Changes to credit-default swaps could be biggest since 2009.

Credit-default swaps market leaders will meet this week in New York and London to discuss changes to the contracts in what may be the biggest revisions since 2009, according to people familiar with the situation.

Possible changes to standard contracts, which are governed by the International Swaps and Derivatives Association, include how debt-for-equity exchanges would be treated after a bankruptcy, specifying that credit swaps only cover losses from defaults that occur after their purchase, and clarifying how the date of a so-called credit event is determined, said the people, who asked not to be named because the discussions are private.

Fixing a Flaw

One possible change includes fixing a flaw in the contracts that can leave buyers with only part of their losses covered from a sovereign debt restructuring, Steven Kennedy, an ISDA spokesman in New York, said earlier this week.

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