ISDA Releases Protocol to Assist Market Participants with Bank Recovery and Resolution Directive

ISDA launched a new Protocol that allows market participants to multilaterally amend the terms of certain ISDA Master Agreements to comply with the EU Bank Recovery and Resolution Directive (the "BRRD") and, more particularly, with certain acknowledgments of bail-in powers as summarized below.

The BRRD provides EU authorities with a variety of tools to amend the terms of certain ISDA Master Agreements to deal with failing banks in Europe, including a means to bail in certain liabilities. ISDA's 2016 Bail-In Protocol will allow Dutch, French, German, Irish, Italian Luxembourg, Spanish and UK entities to comply with Article 55 of the BBRD, which obliges in-scope entities to include contractual terminology in Master Agreements creating any relevant liability and governed by the law of a third country to ensure that their creditors agree to recognize any bail-in of those liabilities.

The BBRD was adopted on July 2, 2014. It required implementation in member states by January 1, 2015. The bail-in protocol tool was required to be implemented beginning January 1, 2016. The regulatory technical standards of Article 55 will become effective on July 28, 2016.