Compliance with QFC rules can also be achieved through negotiated bilateral agreements. The parties may use bilateral amendments in cases where, for example, they wish to opt only for the United States special resolution regime, but do not wish to opt for the other regimes identified. The bilateral amendments would also allow a party to select certain GSIBs and QFCs for which it wishes to make the necessary changes. The parties may also use bilateral agreements if they do not wish to approve the provisions of the 2018 Protocol on related enterprises, as their QFC (and associated credit enhancements) do not contain cross-defaults directly or indirectly related to insolvency proceedings or transfer restrictions. ISDA has prepared standard bilateral amendments that the parties can use for this purpose. However, the QQFC rules provide an incentive to comply with the 2018 Protocol (or the 2015 Protocol) by providing refuge to parties who, as mentioned above, choose to comply with this way. The 2018 Safe Harbored Protocol and the 2015 Protocol contain certain creditor protection provisions, including in the event of bankruptcy of a related entity of a covered entity, that are not available to parties who choose to comply with QFC rules through bilateral amendments. Accordingly, the parties should take into account the advantages and disadvantages of using bilateral amendments. Timing requirements – Subject to certain special rules for companies that have recently become (or will be) covered, covered QFCs generally only include QFCs that cover the covered business (i) after 1 If, on 1 January 2019, the covered entity or related entity also covers a QFC with the same person (or a consolidated related entity), January 1, 2019 or after January 1, 2019. 2019. Therefore, old contracts need to be adapted where a counterparty or one of its consolidated related entities intends to continue to transact with the hedging entity or its related companies.
We have prepared these ieca QFC Stay Rule compliance documents as easy-to-use alternatives to ISDA® 2018 Resolution Stay Protocol (“ISDA® Protocol”) and ISDA® bilateral amendment, so that companies can make their existing QFCs compliant (i.e. modify) their existing QFCs with GSIB counterparties. In the same way, we have prepared the two additional forms for companies to add their new QFCs with GSIB counterparties in a simple way QFC-Stay-Compliance Rules….