Atribute	Detail
Resolution Reporting Subject Matter	Guidance
Guidance Documents	Derivatives
Taxonomy	-
Unique Identifier	QA2020-115

Question

What should the institutes fill in for derivatives if none of the three codes is applicable (e.g. in case they have only signed the ISDA US Stay Protocol)?

Response

The LDR drop-down options on ISDA Protocols and resolution stay recognition aim to assess resolvability from an EU perspective. The essential question is, if and how, for a specific liability, stay rules and powers provided to EU resolution authorities by the BRRD (as transposed into national law) have been recognised contractually by the counterparty. The predefined options were the only existing ISDA Protocols at the time of LDR 2020 launch that achieve such recognition. Therefore, additional options were not necessary. The ISDA 2018 U.S. Resolution Stay Protocol, comparable to a module under the ISDA 2016 Resolution Stay Jurisdictional Modular Protocol, provides a contractual standard documentation to comply with the U.S. resolution stay recognition requirements (“QFC stay rules”). For the resolvability assessment from an EU perspective, and in particular the question whether resolution stays under the EU resolution regime are backed contractually for a specific liability, adherence to the U.S. Resolution Stay Protocol is not relevant. If for a specific liability only the ISDA 2018 U.S. Resolution Stay Protocol has been adhered to by the parties to the relevant financial contract, and no other recognition clauses have been agreed on, no ISDA Resolution Stay Protocol that would be relevant from an EU resolvability perspective has been adhered to. In T07.00, c0061 the institution should therefore choose “No” from the predefined list. If EU stay powers are not contractually recognised by the counterparty, including by another (e.g. bilateral) agreement/amendment, the institution should choose “No“ as well in T07.00, c0071. This will be particularly relevant for resolvability, if the financial contract is governed by the law of a third country.

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