ISDA Amend User Guide. ISDA Dodd Frank Protocols / Cross Border Representations / EMIR Classification

Transcription

1 User Guide ISDA Dodd Frank Protocols / Cross Border Representations / EMIR Classification

2 Copyright Unpublished work 2012 Markit Group Limited This work is an unpublished, copyrighted work and contains confidential information. Only authorized users are permitted to access this work. Any unauthorized use, disclosure, reproduction or dissemination, in full or in part, in any media or by any means, without the prior written permission of Markit Group Limited will subject the unauthorized party to civil and criminal penalties. Trademarks Mark-it, Markit, Markit Loans, and Markit RED are trademarks of Markit Group Limited. Other brands or product names are trademarks or registered trademarks of their respective holders and should be treated as such. Data Services Agreement and Use Restrictions You are bound by the terms and conditions of the Data Services Agreement as agreed to by your employer or its affiliate. In particular, access to the Markit website is limited to the number of locations and to the number of users specifically set forth in such Data Services Agreement whether such use is through physical transfer of a copy, electronic access through a wide area network of any description, or by any other means whatsoever. The Markit system and website contain trade secrets. Accordingly, you are expressly prohibited from (i) modifying, translating, reverse engineering, or disassembling any of the information, services or data found on such system and website, or (ii) creating derivative works based thereon, in each case, except as expressly permitted, if at all, by the Data Services Agreement governing your use thereof. Unauthorized copying of the Markit website or this user manual constitutes copyright infringement. Software piracy is theft. To the extent anything in this user manual is inconsistent with or conflicts with the terms and conditions of the applicable data services agreement or the terms of use, the terms and conditions of the Data Services Agreement or the Terms of Use, as applicable, shall control. Each user upon his initial accessing of the Markit website must agree and acknowledge as a condition to his access thereto to be bound by the terms and conditions of the data services agreement through which it was provided a username and password. Limited Warranty and Disclaimer Except for the express limited warranties set out in the applicable Data Services Agreement, Markit makes, and the user and the client it is associated with receives, no warranties, express, implied, statutory or allegedly extended in any communication with the user or the client it is associated with. Markit specifically disclaims any implied warranty or merchantability or fitness for a particular purpose. Markit does not warrant that the operation of the program or website, or use of this publication shall be uninterrupted or error free. In no event shall Markit be liable for any damages, including without limitation, direct damages, punitive or exemplary damages, damages arising from loss of data, cost of cover, or other special, incidental, consequential or indirect damages of any description arising out of the use or inability to use the Markit system or website or accompanying documentation, however caused, and on any theory of liability. This user guide may be updated or amended from time to time and at any time by Markit in its sole and absolute discretion and without notice thereof. Markit is not responsible for informing any client of, or providing any client with, any such update or amendment. Please regularly check the Markit website to obtain the current version of this manual. Any download or distribution of data from the Markit website is subject to restrictions on the use thereof as set forth in the Data Services Agreement entered into between Markit and the client institution through which you were provided a username and password. Access to the website is expressly conditioned upon the compliance by each user with the restrictions, terms and conditions set forth in its client institution Data Service Agreement. It is the responsibility of each user to be familiar with the restrictions, terms and conditions contained in the Data Services Agreement. 2 of 25

3 Table of Contents ISDA Amend User Guide... 1 Overview Add Entity/Entities to Markit Counterparty Manager and Select Counterparties Complete Protocol 1.0 Questionnaire Complete Protocol 2.0 Questionnaire Link Entity Information to the Protocol Questionnaire View your Counterparty Data Matches Optional Questions on Protocol 1.0 Reference Notes: Questions about the ISDA Amend tool? Notes: Protocol 2.0 Note (March 2013 DF Protocol): If you have completed protocol 1.0 (August 2012 DF Protocol) on ISDA Amend and do not have additional entities or information to provide please reference section 1.6 on page 5 and section 3.1 on page 20. Cross-Border Representations (1.9) instructions are on page 7. 3 of 25

4 Overview Markit has released the ISDA Amend tool to enable clients to match their ISDA Dodd Frank Protocol questionnaires and Cross Border Representations directly with their counterparties via the Markit Counterparty Manager platform. 1. Add Entity/Entities to Markit Counterparty Manager and Select Counterparties This section explains how to answer the entity specific questions from the DF Protocol. This step corresponds with completing questions 1-5 of section III of Protocol 1 (August 2012 DF Protocol). Important Note You need to complete this step for each PCA Principal on whose behalf you will be signing up to the questionnaire. If you have a number of entities to create we can provide you with a Batch Upload template to expedite this process. 1.1 Under the Manage Tab in Markit Counterparty Manager Select Entities 1.2 Create or Edit an Entity via Add Entry or Edit Button Complete the mandatory fields shown in red on screen and click on Save You need to enter the True/Legal Name first and then select either the True/Legal Name or Client Identifier (Client Identifier is not a mandatory field) as the Display Name You also need to enter an pre-lei/lei Entities created on Markit Counterparty Manager are validated against those that are also registered with the CICI Utility ( as part of our ISDA Amend process. 4 of 25

5 The validation performed is to check that the True/Legal Name, pre-lei and Registered Country of an entity match that of the registered entity on the CICI Utility website. If an entity fails any of these checks you will have an option to accept the data from the CICI Utility by clicking on OK, or to reject the data from the CICI Utility by clicking on Cancel. In either case you will be able to save your entity information. An on-line report called Unverified Entities lists any discrepancies. This report is on the Home Page of the Markit Counterparty Manager platform. 1.3 Click on the Regulatory Information chevron after Basic Information details are complete Select the Regulatory action(s) you wish to perform Complete the mandatory fields shown in red on screen and click on Save Pre-LEI/LEI the system will accept any valid 20 alphanumeric identifier 1.4 Dodd Frank Information Principal Business is a free text field of up to 500 characters Registered Address of where the entity is domiciled 1.5 Third party and Guarantor Details Scroll down the Regulatory Information page and complete applicable details for the PCA Principal(s) Third Party(s) and Guarantor(s) for the entity 1.6 Signed ISDA Adherence Letters These are mandatory questions In addition, for Protocol 2.0 you must provide your ISDA Adherence letter ID You will be unable to save an Adherence Letter ID if it is in the incorrect format Click on Save before proceeding further 5 of 25

6 What is the Adherence Letter ID? The Adherence letter ID is an identification code that is unique to your adherence letter. If you are using ISDA Amend to deliver your questionnaires, there will be a section where you will be asked, (a) if you have submitted an adherence letter and; (b) to enter the Adherence Letter ID. This code matches your adherence letter with your questionnaire(s). You cannot complete matching on the ISDA Amend platform without this number. Where do I find the Adherence Letter ID? When your adherence letter has been accepted by ISDA administrators, an is automatically sent to you (from IT Admin ) which contains a URL that will take you to the section of the ISDA website where the ID code is listed, specifically the protocol shopping cart. If you do not have this then use the reference number/contact address combination under View Open Order, which will also take you to the shopping cart. If you don t have your reference number you can click on the Can t find the confirmation number link available and ISDA will send this to you. Please remember to check your junk if you are having trouble locating s. View order link : ( 1.7 Protocol 2.0 End User Exceptions These are non-mandatory questions If you select Yes to Is PCA Principal an SEC Issuer/Filer you will be able to populate all 3 questions 1.8 Cross Border Representation Answer US Person or Not a US Person to the US Persons Representation question If you answer Not a US Person Questions 2a and 2b will become mandatory If you answer US Person Guarantees to Question 2b, questions 2c and 2d will become mandatory. 6 of 25

7 1.9 EMIR Answer No if your entity is in scope for EMIR If your entity is out of scope for EMIR you need to select the entity type that is out of scope If you are in scope then you will need to complete your EMIR entity type An NFC will need to state whether they are above or below the Clearing Threshold All entities need to state if they are a Pension Scheme Arrangement 2.0 Adding Regulatory Counterparties Relationships Click ADD to select your Counterparty details in the Regulatory Information Page Select the swap dealer legal entities with which you wish to exchange your representation/protocol questionnaires Some Swap Dealers have registered multiple dealer entities (as below) Select the appropriate entity(ies), click the right arrow button and save after the counterparties have been moved to the box on the right of the page If you have a large number of counterparty relationships to add we can provide you with a Batch Upload template to do this 7 of 25

8 Select all of the Counterparties you wish to match against by checking the box to the left of the counterparty OR select all counterparties by checking the top box next to Counterparty Name Click on Apply Regulations A pop up box will appear Select the protocol(s) you wish to apply to the relationships Click on Save A confirmation pop-up will appear 8 of 25

9 Click on the Apply Relationship to other entities button to add the same relationships that you have selected for the current entity to other entities You will be presented with a pop up that will allow you to select the appropriate entities Click on the right arrow button to select all entities or select entities one by one Select the protocol(s) you wish to apply Click Save IMPORTANT NOTE After completing this step your swap dealer counterparties will have visibility into which PCA Principals will be providing representations/protocol questionnaire. However the status of Protocol 2 will appear as missing until the Adherence Letter ID is complete 2.1 Alternative method to Copy Protocol Relationships Alternatively you can navigate to Tools > Batch > Copy Protocol Relationships A pop up will appear on screen this will allow you to apply existing relationships you have initiated for any of the protocols 9 of 25

10 You can select any protocol(s) to copy the existing relationships from You can only select one protocol at a time to apply the relationships to Important Note Only relationships you have initiated can be copied Only entities with LEI/pre-LEIs can be included 2. Complete Protocol 1.0 Questionnaire This section explains how to answer the remaining non-entity specific questions from the DF Protocol 1.0. This step corresponds with completing questions 6-11 of Part II: PCA Principal Information and questions 1-10 of Part III: PCA Principal Status Representations and Elections of the ISDA August 2012 DF Protocol Questionnaire. 2.1 Select Markit Counterparty Manager Regulatory Services Under Manage tab click Regulatory Services and choose ISDA Amend DF Protocol 1.0 As part of Markit Counterparty Manager, ISDA Amend has been created to manage the collection and exchange of protocol questionnaire data Please note - You can attach multiple entities to one questionnaire to the extent that the answers are the same for each entity. This will be done once the questionnaire has been completed (section 3) 10 of 25

11 2.2 Add a Questionnaire for Protocol 1.0 Under the ISDA protocol 1 Questionnaires tab, click Add 2.3 Select PCA Principal Type Select the appropriate PCA Principal Type from the drop-down menu Depending on the PCA Principal Type selected, relevant questions will appear on the next page. The sample below is the questionnaire for an entity that is Other None of the Others Apply 2.4 Complete Protocol Information Fields that are required on the protocol questionnaire are highlighted on the Markit site in red 11 of 25

12 2.5 Addendum 2 The questions are not mandatory but it is still important to review them and provide a response to these questions. Covered Forex Transactions Covered Derivative transactions Additional Pre-Trade Mark Transaction Are you a Category 2 Entity NOTE Swap Dealers and Major Swap Participants are not required to provide a response to these questions. Are you a CFTC Interim Order U.S. Person? All PCA Principals are asked to provide a response to this question to assist swap dealers in determining compliance with certain CFTC regulations in light of the CFTC s Exemptive Order date December 21, Three of the fields on the questionnaire are not mandatory (regardless of your PCA Principal Type selected) but it is still important to review them. These have been highlighted in green below: - Oral Disclosures of Pre-Trade Mark Election - Schedule Selections - The DF Terms Agreement Each of these non-mandatory sections is covered in more detail below 12 of 25

13 2.5 Oral Disclosures of Pre-Trade Mark Election By answering Yes to this question, the PCA Principal is consenting to receive oral disclosures (with written confirmation to follow post-trade) of any pre-trade mid-market marks and basic material economic terms, pursuant to CFTC Regulation (a)(2) and (3)(i) IMPORTANT NOTE Not selecting this option may significantly change your trading experience if you are accustomed to conducting trades by phone, as your swap dealers will be required to deliver the pre-trade disclosures (including price) to you in writing prior to every trade 2.6 Schedule Selections If the requisite schedules are not selected, the applicable suitability safe harbour will not be adhered to and the swap dealer will be required to reach out to PCA Principal for additional information 2.7 DF Terms Agreement The DF Term Agreement is required whenever a Protocol Covered Agreement does not exist between the parties in connection with their derivative and certain foreign exchange transactions 13 of 25

14 (e.g., give-up transactions with an executing dealer). Accordingly, the DF Term Agreement must be filled out whenever a PCA Principal wishes for the Protocol to cover a transaction that is not currently governed by a Protocol Covered Agreement 2.8 Complete Protocol Signature Block Electronically When a Designated Evaluation Agent (DEA), Qualified Independent Representative (QIR) or Fiduciary (FID) is submitted as part of the Protocol, a signature from the advisor is required If an advisor is completing the protocol questionnaire on behalf of a fund or funds, the electronic signature block within ISDA Amend may be completed directly by the advisor. In this case providing separately is not required and may be selected as N Where the signature is NOT provided separately (i.e. N is selected per the above step) click Add and complete the electronic signature form 14 of 25

15 2.9 Complete Protocol Signature Block Separately Providing signature details separately is required when an entity is completing the questionnaire on behalf of itself and its Designated Evaluation Agent (DEA), Qualified Independent Representative (QIR) or Fiduciary (FID) entities In this case the option to provide details separately may be selected as Y Click on the highlighted Designated Evaluation Agent link (please note this link will be different depending upon the advisor type relevant to the PCA Principal) 15 of 25

16 The DEA/QIR/FID separate signature form PDF will appear (depending on the PCA Principal Type) The signature page must be sent to the PCA Principal s appropriate DEA/QIR/FID for completion and subsequent upload by the PCA Principal to Markit Counterparty Manager (MCPM) IMPORTANT NOTE Your DEA must include a physical signature on the form. Once the PCA Principal receives the signed agent document back and saves onto its PC, go to Markit Counterparty Manager On Markit Counterparty Manager - Click Create > Documents > New Document from the navigation menu Click on the Browse button to select a file to upload (signed agent document) 16 of 25

17 Choose a Category of ISDA Document and a Document Type of Third Party Signature Block In the Description field provide pre-lei/ LEI and related document description (FID, QIR or DEA) Select Complete for Status under Additional Data Relate the signed document to the relevant PCA Principal by clicking on the spyglass Select the entities by double clicking on them so they appear in the right hand side of the pop up box 17 of 25

18 Click on OK Click on Save You will see a pop up confirmation that the document has been uploaded Click on Exit this will take you to the Documents library screen (alternatively, go to Manage and select Documents in MCPM) Select the document and click on A pop up dialogue box appears change Type to Team and click on Advance Filter Type in your counterparty name and click search A list of teams at the counterparty will appear select the ISDA Amend team by double clicking on it 18 of 25

19 Repeat the search process for all of your counterparties Once complete click OK You can add a message in the body of the template if you wish Click on Send 19 of 25

20 3. Complete Protocol 2.0 Questionnaire 3.1 Select Markit Counterparty Manager Regulatory Services Under Manage tab click Regulatory Services and choose ISDA Amend DF Protocol 2.0 As part of Markit Counterparty Manager, ISDA Amend has been created to manage the collection and exchange of protocol questionnaire data Please note - You can attach multiple entities to one questionnaire to the extent that the answers are the same for each entity. This will be done once the questionnaire has been completed (section 3) 3.2 Add a Questionnaire for Protocol 2.0 Under the ISDA protocol 2 Questionnaires tab, click Add 3.3 Type in a name for your questionnaire 3.4 Complete Protocol Information Mandatory fields on the protocol questionnaire are highlighted in red Additional explanatory information is available at the hyperlinks associated with the questions 20 of 25

21 3.5 PCA Principal must answer Yes or No to agree to the ISDA March 2013 DF Protocol Master Agreement Important Note A Yes response to this question is an agreement by PCA Principal to enter into the ISDA March 2013 DF protocol Master Agreement with each counterparty to whom this Questionnaire has been delivered A No response or a non-response will not be an agreement to enter into the ISDA March 2013 DF protocol Master Agreement with each counterparty to whom this Questionnaire has been delivered 3.6 Complete Protocol Signature Block Electronically Complete the Full Legal Institution name text box by inserting the full name of the legal entity (Or natural person) that submitted the related ISDA March 2013 DF Protocol Adherence Letter to ISDA (i.e. It is recommended that the name here be identical to the name on the adherence letter; however any authorized signer may provide their information on the signature block) 21 of 25

22 Complete the Individual Name text box by inserting the name of the person completing this Questionnaire Complete the Individual Title text box by inserting the title of the person completing this Questionnaire Click on Submit to save the questionnaire 4. Link Entity Information to the Protocol Questionnaire This section explains how to make your complete protocol questionnaires visible to your swap dealer counterparties by connecting all of your entities to the relevant DF Protocol Questionnaire. 4.1 Map Entities to Your Protocol Questionnaire(s) Click on Manage > Regulatory Services and select either ISDA Amend Protocol 1.0 or 2.0 Select the questionnaire by checking the box beside the entity questionnaire under Questionnaire Set you would like to map to one of your entities Click Add entities to Questionnaire which will finalize the mapping of the Questionnaire selected to the entity The below screen will appear listing all of the PCA Principals for which you added entity information pursuant to Step 1 of the Markit Process. Select the entities to which you would like to map the questionnaire Once all entities have been mapped click Save This will then make your questionnaire visible to your selected counterparties If you have a large number of entities to map to your questionnaires we can provide you with a Batch Upload template to do this 22 of 25

23 IMPORTANT NOTE: - Mapping functionality can be leveraged for mapping several entities on whose behalf an Institution fills out entity information to one questionnaire - For example, a large investment advisor with several funds that are Special Entities may be able to leverage the same questionnaire due the fact the same PCA Principal Types would likely have the same answers to their questionnaire 5. View your Counterparty Data Matches Under Manage tab click Regulatory Services Select one of the following options: ISDA Amend DF Protocol 1.0 ISDA Amend DF Protocol 2.0 ISDA Amend Cross Border Representations ISDA Amend EMIR Classification To view Protocol matches select ISDA protocol 1 match questionnaire or select ISDA protocol 2 match questionnaire On this screen you will be able to view the answers from your counterparties The status column allows you to track the answers you have reviewed the status can be changed from Unprocessed to Processed. The status has no effect on the ability of your counterparties to see your questionnaire or representations 23 of 25

24 6. Optional Questions on Protocol 1.0 Reference Notes: Failure to complete all of the questions in your Questionnaire may cause significant disruption in your trading with Swap Dealers. 1) Do you agree to the DF Terms Agreement? Advisory Note: May be required if parties enter into a swap that is not governed by an existing written agreement (e.g. an ISDA Master Agreement) The Protocol applies to swaps governed by existing written agreements. In the event that the parties enter into a swap that is not governed by an existing written agreement, the ISDA August 2012 DF Protocol will not apply to such swap. In order to ensure Protocol provisions apply, parties can elect the DF Terms Agreement. 2) Please provide the address for delivery of required Dodd-Frank notifications and disclosures: Advisory Note: Providing contact information in this box will allow your swap dealer to direct notifications and disclosures to your preferred internal contact. Swap dealers are required to deliver certain notifications and informational disclosures to counterparties, such as daily marks reports. These notifications and informational disclosures may be voluminous. This question provides counterparties with the opportunity to provide an address to be used by a swap dealer for the delivery of such notifications and informational disclosures. 3) Do you agree to receive oral disclosure of pre-trade marks? Advisory Note: This provides your Swap Dealer with permission to provide you with trade-specific economic terms orally allowing for more timely execution of trades. The external business conduct rules require swap dealers to provide certain pre-trade midmarket marks and disclosures about the basic material terms of a swap before entering into that swap with certain counterparties. In certain markets, a requirement to provide such disclosures in writing could interfere with the ability to execute trades. This question allows the counterparty to indicate that it will accept oral disclosure from a swap dealer of pre-trade marks and basic swap terms, provided that written confirmations of all such information are subsequently provided. 4) Please make your Schedule selections: Advisory Note: Schedules satisfy certain regulatory requirements based upon your PCA Principal Type. Omitting the appropriate Schedule selection may cause disruptions and/or delays in your trading with Swap Dealers. The external business conduct rules impose upon swap dealers a duty to reasonably determine the suitability of any swap recommended to a counterparty. The rules also impose heightened suitability or best interest duties when a swap dealer recommends a tailored swap to a special entity. In order to comply with such rules, a swap dealer will likely be required to perform comprehensive new diligence on its counterparties prior to trading unless the applicable safe harbors to such rules are satisfied. Additional explanatory information is available at the hyperlinks associated with the optional questions that you have not completed. 24 of 25

25 7. Questions about the ISDA Amend tool? For questions about the ISDA Amend tool functionality, please contact Markit via at or telephone: ISDA Amend Hotline UK: + 44 (0) ISDA Amend Hotline US: Or you can download the FAQs directly from the platform via the Help menu 25 of 25