The recent auction and related deliberations of the Credit Derivatives Determinations Committee in respect of Avon Products, Inc. were the subject of much interest across the market, with competing views on whether a promissory note should have constituted a Deliverable Obligation for the purposes of the auction or not. On this call, our speakers explored the key issues that arose in this case. They also provided an update on the status of ISDA's recent consultation in respect of the reform of the Credit Derivatives Determinations Committees.

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With the EU's EMIR 3.0 regulation expected to be published in the Official Journal imminently, this session looked at where things stood in relation to EU EMIR and UK EMIR and what changes were in the pipeline. We focused on areas of divergence between the two regimes and how counterparties could prepare for the upcoming changes.

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We brought together our experts to examine the ongoing and significant changes to the Benchmarks regime and discussed recent events related to the IBOR transition. Beginning with the EU Benchmarks Regulation, the panel discussed the market issues and concerns surrounding the ability of EU firms to continue referencing non-EU benchmarks with the end of the transitional period the following year. We then turned to market responses to the transition from LIBOR with the cessation of synthetic LIBOR in September, along with our observations on the recent Standard Chartered PLC test case on LIBOR transition.

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On this call, the panel provided an overview of current market trends in strategic equity derivatives, regulatory issues that should have been on the radar screen, and developments in relation to the UK's financial collateral regime and the 2002 ISDA Equity Derivative Definitions.

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Recent market disruptions, such as the imposition of sanctions and the COVID 19 pandemic, have highlighted the challenges which parties may face in attempting to serve notices and close out their transactions. At the same time, the introduction of resolution stay regimes supported by the ISDA Resolution Stay Protocol and the wide use of initial margin held with third party custodians have all added a new dimension for close-out procedures, enforcement, valuation and decision-making. On this call, the panel discussed ISDA's proposed initiatives to mitigate some of these issues and support the market in managing these new close-out aspects.

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On this call the panel provided an overview of recent market developments and legal initiatives affecting digital assets and digital currencies. Our expert speaker from the US began the call by outlining the ways in which digital assets may intersect with derivatives, notably in relation to the tokenization of traditional assets for use in derivatives trading, clearing and settlement and transactions referencing crypto assets as the underlying. The focus then turned to the UK and the evolving legal discussions on the insolvency and property law aspects of Digital Assets, together with the potential implications of these for transactions. The panel concluded the call by reflecting on ISDA initiatives over the past 18 months, such as the publication of the Digital Assets Derivatives Definitions and the 'Tokenized collateral model provisions' for inclusion in variation margin CSAs.

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ISDA recently published a report assessing the function, governance and membership of the Credit Derivatives Determinations Committees (the "DCs"), taking into account feedback from various stakeholders across the market ("the Report"). Whilst the Report recognised that the DC process provided a valuable service to the credit derivatives market, it nonetheless set out a number of proposals for further consultation and improvement. The panel began the call by reflecting on the DC process as it operated at the time, before highlighting some of the most notable observations within the Report. They then discussed the recommendations for reform and potential next steps.

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The panel gave an overview of the current market in SLDs, before looking at some of the regulatory questions raised by these and factors that may affect how parties approach transactions. The panel also took a closer look at how the SLD Clause Library has been developed and will be applied and outline some of the key issues to consider when developing SLD Confirmation terms.

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ISDA continues to be busy consulting with market participants on a wide range of industry initiatives. Beginning with digital assets, following onto the panel considering ISDA’s upcoming report on the lessons learned and evolving challenges posed by sanctions as well as the status of the proposal to develop a Notices Hub (and possible protocol) for the serving of close-out related notices (and other notices). The panel will conclude the call by updating on the ongoing considerations regarding potential updates to the FX Definitions.

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On this call the panel gave an overview of what would be on the UK and EU regulatory agenda over the following months and where firms should be focussing their attention. Top of the list was the Financial Services and Markets Act 2023, which implements the UK's post-Brexit future regulatory framework for financial services. During the call the panel explained how the Act updates the UK regulatory regime, before outlining certain key features for derivatives markets. They also discussed other topical issues such as the proposed reforms to MiFID/MiFIR and EMIR.

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The COVID pandemic and recent imposition of sanctions have once again shone a spotlight on the specific requirements and procedures for serving notices under Sections 5 and 6 of the ISDA Master Agreement. Market participants have encountered various difficulties in attempting to deliver notices to their counterparties, leading to uncertainties as to how ensure notices are effectively delivered. The extent of such challenges prompted ISDA to establish a working group for the purpose of considering potential amendments to the notices provisions. On this call the panel outlined some of the issues commonly encountered by the market and how parties have traditionally addressed these. They also provided an update on ISDA’s proposed amendments and how they could expand the scope of the existing notices provisions, before considering other potential developments for effectively serving notices.

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Clifford Chance's derivatives experts will be attending the 2023 ISDA Annual General Meeting, and panellists from across our global network will be sharing their observations across two 30-minute calls before and after the AGM – one looking forward to the likely key themes that will come out of the discussion with keynote speakers, regulators and market participants in the financial markets, and one after the AGM picking up on the main takeaways from the AGM. Clifford Chance are proud sponsors of the 37th ISDA AGM.

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On this call, the panel provided an update on current developments affecting the commodities markets and consider some of the issues arising as a result of last year's suspension of trading at the LME. They also outlined recent developments in the trading of voluntary carbon credits following the publication of the 2022 ISDA Verified Carbon Credit Transaction Definitions, before moving on to discuss the scope of ISDA's latest project in relation to sustainability-linked derivatives.

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On this call the panel discuss the newly published ISDA Digital Asset Derivatives Definitions, giving an overview of their development and the scope of the definitions and considering what future developments may be in relation to digital asset derivatives. The panel also provided an overview of developments in the repo and stock lending markets in relation to digital assets, as well as an overview of upcoming regulatory developments that may impact derivatives, repo and stock lending

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On this call, the panel provided an overview of the current status of legislative and regulatory developments to address tough legacy contracts (including the FCA's proposals to require the continued publication of the 1, 3 and 6 month US dollar LIBOR settings on a synthetic basis until the end of September 2024), together with an update on issues relating to the continued use of term rates. They also considered the actions that market participants may be taking to remediate their US dollar LIBOR agreements, incorporating lessons learned from the transition from sterling LIBOR, whilst reflecting on the issues they may face in doing so.

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The original EU EMIR legislation has already undergone two major amendments since it came into force in 2012. Changing market circumstances and developing issues continue to focus attention on the scope and detail of the regulation and whether these strike the right balance between risk and opportunity. On this call, the panel discussed the key aspects of the proposal relating to clearing, margin requirements, reporting, intra-group transactions, and CCPs, as well as considering equivalent developments in the UK.

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On this call, the panel provided an update on developments in the voluntary carbon credit (VCC) market, including the soon to be released 2022 ISDA Verified Carbon Credit Derivatives Definitions, the characterisation of VCCs under the recent Law Commission Consultation Paper on Digital Assets and recent regulatory proposals which have the potential to affect derivatives market participants.

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On this call, the panel discussed the scope of the ISDA netting opinion for China and the implications of this for market participants, including in relation to regulatory margin requirements. They also considered how netting arrangements could be affected by the provisions in the draft EU Insurance and Recovery Directive, by the proposals in the UK Financial Services and Markets Bill on the resolution of insurers, and by the potential adoption into UK law of two UNCITRAL model laws relating to cross-border insolvencies.

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