ISDA announces market practice changes for Asia CDS markets

By Jennifer Chiou

New York, Oct. 29 - The International Swaps and Derivatives Association, Inc. announced market practice changes to the trading convention for credit default swaps in Japan and Asia ex-Japan at its 2009 regional conference in Tokyo.

These changes, which will go into effect following the Dec. 20 roll, include the adoption of standard coupons and full first coupons in CDS transactions, according to an ISDA news release.

Standardization of coupons in Japan and Asia ex-Japan follows similar changes in North America, Europe, Australia/New Zealand and emerging markets in the Middle East and Latin America, the ISDA said.

"ISDA and the industry have worked extensively throughout the year to achieve increased standardization, transparency and liquidity in the CDS market through the adoption of standard coupons and other market practice initiatives," Robert Pickel, executive director and chief executive officer, said in the release.

Details of the changes include the following:

• Firms will trade Japan CDS with standard coupons of 25 basis points, 100 bps and 500 bps and full first coupons going forward; and

• Firms will trade Asia ex-Japan CDS with standard coupons of 100 bps and 500 bps and full first coupons going forward.

The industry successfully adopted fixed coupons in North America in April, in Europe in June and in Emerging Markets in Europe, the Middle East, Latin America and Australia/New Zealand in September.

ISDA is based in New York and represents participants in the privately negotiated derivatives industry.

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