December 16, 2016 / 11:58 AM / a year ago

DERIVATIVES-IBA wins bid to oversee ISDA credit committee

LONDON, Dec 16 (IFR) - ISDA has appointed ICE Benchmark Administration to the newly created role of secretary for the five regional credit derivatives determinations committees.

The appointment follows a tender process that launched in May. It is part of a wider attempt to strengthen the independence of a body that ultimately determines whether entities have defaulted on their liabilities and whether credit default swaps should pay out.

In its new role, IBA will be responsible for administrative duties including passing questions submitted by participants to the relevant regional determination committees, coordinating meetings, organising and compiling votes of DC members and publishing decisions.

“The ISDA selection committee felt IBA has the necessary skills and expertise to support and develop the DC process and help ensure the long-term viability of the credit derivatives market,” said Scott O‘Malia, ISDA’s chief executive. “We will work closely with IBA in the coming months to ensure a smooth and orderly transition of the DC secretary responsibilities.”

The transition of administrative duties is expected to take around six months and will see IBA develop a new DC website. New infrastructure will also be introduced to ensure a robust and transparent process that meet evolving regulatory standards.

IBA will not have a voting role on the committees, each of which comprise 10 sellside and five buyside members.

ISDA will continue to write DC rules and the credit definitions that drive the decision making process. Earlier this year, the DCs voted to make a series of changes to DC rules, including the requirement for voting firms to confirm they have written policies in place for identifying and managing conflicts of interest.

IBA, a subsidiary of the InterContinental Exchange, was created in 2013. The unit won a tender to take over the administration of Libor in 2014 and is now responsible for a range of financial benchmarks including LBMA gold and the ICE swap rate (formerly ISDA Fix).

As part of a drive to enhance transparency and effectiveness across economic indicators, IBA embarked on a reform process that aligns with IOSCO benchmark principles. The firm has established oversight committees for each benchmark, appointing independent experts and has shifted calculation methodology from polled submission models to real, tradable quotes on regulated venues. (Reporting by Helen Bartholomew)

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