BRRD II: Another day, another Protocol
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Yesterday, ISDA launched a new module to the ISDA Resolution Stay Jurisdictional Modular Protocol (JMP)- the BRRD II Omnibus Module (“the Module”).
Not to be confused with either Omnibus Directives, the new module acts to amend contracts to incorporate BRRD II Article 71a revisions. These revisions require third-country counterparty consent to statutory stays on early termination in financial contracts. The Module covers those jurisdictions which have both transposed BRRD II into their national law and have been identified as a priority by feedback from market participants. The covered list comprises: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Luxembourg, Spain and Sweden. In the cases of France and Germany, the Module supersedes and replaces the earlier applicable JMP modules.
Entities must adhere as Regulated Entity, a Module-Adhering Party or both, dependent on its status within a given covered jurisdiction. Regulated entity is subject to the particular definition in each national jurisdiction, the election of Module-Adhering Party is a recognition that contracts with a Regulated Entity will be amended. Any given entity may adhere as one or the other in respect of an individual jurisdiction.
The Protocol is open for adherence by both ISDA members and non-members alike, subject to the usual one-time $500 payment. Adherence is via the usual Adherence Letter submission mechanism and revocation is subject to the typical October window. Normal agency facilities apply.
The UK has not transposed BRRD II into national law and has therefore been a third-country under EU law since the Brexit end-date. UK-domiciled entities will accordingly face requests for adherence as a Module-Adhering Party from EU Regulated Entity counterparties.
The final quarter of 2021 marks the beginning of IM Phase 6, CSDR Phase 3 (possibly) and BRRD II. In the context of inevitable resource restraint, the Module is a welcome addition to the Protocol library. While the Protocol mechanism is expedient and effective, the proliferation of amendment by Protocol does little to aid contractual clarity. In time, widely-adopted legal tech solutions will provide a unified view of a given contract; meantime, firms may prefer to amend bilaterally.Contact Us