ISDA Concurs With Financial Regulators' Concerns Regarding Expansion of OTC Derivatives Regulation.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 23, 2002

The International Swaps and Derivatives Association (ISDA) today commented on a letter issued on September 18, 2002 by the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission expressing serious concerns about the legislative proposal by Senators Lugar and Harkin to expand regulation of the over-the-counter (OTC) derivatives markets.

"This letter signed by the chief financial regulators in the United States recognizes the positive contributions of OTC derivatives to the economy and presents a clear and convincing case against adoption of this unnecessary and flawed legislative approach," said Robert G. Pickel, CEO and Executive Director of ISDA.

In addition to citing the positive contribution of OTC derivatives to the economy's ability to respond to the stresses and challenges of the last two years, the letter outlines specific concerns about the negative impacts of the proposal's requirement to disclose proprietary information and impose new capital requirements. The full text of the letter can be accessed on ISDA's web site. The proposal developed by Senator Harkin and Senator Lugar is expected to be offered as a substitute amendment to S.2724, should the Senate Agriculture Committee proceed with formal consideration of this legislation. S.2724 is legislation introduced by Senator Dianne Feinstein to provide regulatory oversight over the energy and metals trading markets. ISDA joined with major trade associations in opposing the amendment, similar to S.2724 of April 2002. Offered by Senator Dianne Feinstein to the Senate Energy Bill, S.2724 would reverse legal certainty provisions adopted as a part of the Commodity Futures Modernization Act of 2000 (CFMA) for OTC energy derivatives. Analysis of this legislation and the industry letter can also be accessed on the Comment Letter section of ISDA's web site.

ISDA is the global trade association representing leading participants in the privately negotiated derivatives industry. ISDA was chartered in 1985, and today has more than 590 member institutions from 44 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities. Information about ISDA, its activities and OTC derivatives is available on the Association's web site: www.isda.org.