LONDON, March 5 (IFR) - The International Swaps and
Derivatives Association has proposed a series of changes to
credit default swap contracts to fix a series of perceived flaws
in the financial instrument.
The main ISDA proposal focuses on ensuring sovereign CDS
protection compensates for losses sustained on government bond
positions, while a similar proposal for financial CDS is
reportedly in the works as well.
The revisions come almost a year after the Greek debt
restructuring, when it became clear CDS holders might not
receive adequate payouts on protection they had purchased.
"This is part of ongoing work to look at the CDS definitions
and see what changes might need to be in light of the events of
the last 10 years, and more recently the financial crisis and
European sovereign debt crisis," Mark New, assistant general
counsel at ISDA told IFR.
"The proposals are going out to ISDA's credit derivatives
market practice committee, which any ISDA member with a passing
interest in CDS can join and contribute to."
(Reporting By Christopher Whittall; editing by Alex Chambers)