Dura credit derivative trades to be settled under ISDA protocol; auction scheduled for Nov. 28

By Caroline Salls

Pittsburgh, Nov. 8 -Dura Operating Corp.'s credit derivative trades will be settled using a protocol set up by The International Swaps and Derivatives Association that bypasses one-on-one negotiations and includes participation in an auction, according to an association news release.

The association said the Dura protocol offers market participants an efficient way to settle credit derivatives trades involving Dura.

It enables counterparties to amend credit derivatives documents on a multilateral basis rather than through one-on-one negotiations and to participate in an auction, scheduled for Nov. 28, which will determine the final price for Dura bonds.

Markit and Creditex will administer the auction.

The adherence period for the protocol runs to Nov. 17 from Nov. 8.

According to the release, the Dura protocol is the first protocol published by the association that permits cash settlement of single-name, index, tranche and other credit derivative transactions. The association said previous protocols only enabled cash settlement of index trades.

"ISDA's work to develop the new alternative settlement mechanism and incorporate it into our protocol framework underscores our commitment to increase efficiency and reduce risk in privately negotiated derivatives," association chief executive officer and executive director Robert Pickel said in the release.

Dura, a Rochester Hills, Mich.-based automotive parts maker, filed for bankruptcy on Oct. 30 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 06-11202.

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