On 13 May 2013, ISDA launched the ISDA 2013 Reporting Protocol (the “Reporting Protocol”).
The purpose of the Reporting Protocol is to assist firms which are subject to mandatory trade reporting requirements (under, inter alia, the Dodd-Frank Act, EMIR and MifIR). In recognition of the fact that many firms may also be subject to contractual, statutory or regulatory non-disclosure and confidentiality provisions which could prohibit the disclosure of trade reporting information, the Reporting Protocol documents counterparties’ consent to the disclosure of information necessary to comply with mandatory reporting requirements.
ISDA has published separate protocols facilitating compliance with certain requirements of the Dodd-Frank Act, and has stated that it will soon publish a protocol doing the same in relation to EMIR. These protocols already include, or will include, disclosure consents. The Reporting Protocol is intended to be more generic than the Dodd-Frank and EMIR Protocols, while being consistent with them.
ISDA warns that the consent language in the Reporting Protocol may not be sufficient to fully address all additional disclosure requirements, compliance with which may have to be achieved by way of bilateral amendments to documentation. For counterparties in this situation, or for those that simply do not wish to adhere to the Reporting Protocol, ISDA has published two side letters (Principal and Agent versions), which parties can enter into bilaterally, which contain the same consent language as found in the Protocol, and which can be supplemented as the parties see fit.
The consent provisions within the Reporting Protocol are non-objectionable. However, any firm wishing to adhere should note that:
- In providing consent to disclosure, it will be taken to have represented and warranted that any third party to whom it owes a duty of confidence in respect of the information disclosed has consented to the disclosure of that information;
- With respect to ISDA Master Agreements and other agreements which benefit from third party credit support that expressly requires the consent of the third party to be obtained prior to any amendment being made, it undertakes that it has obtained the necessary consent and that it will, upon demand, deliver evidence of such consent to the other party; and
- Asset managers must be able to either name their underlying clients or be able to identify them with a unique identifier which will be known and recognized by all other adhering parties.
Irrespective of whether firms intend to adhere to the Reporting Protocol or not, the consent to disclosure language is a useful clause, which firms should consider including in their template ISDA documentation to address general mandatory reporting requirements going forward.