The Securities Industry and Financial Markets Association’s (SIFMA’s) Asset Management Group (AMG) convened buy side members to work with Lehman’s court-appointed Securities Investor Protection Corporation (“SIPC”) Trustee to develop an industry protocol that will provide guidance to firms terminating outstanding trades with Lehman. The protocol, 08-01, applies to To-be-announced mortgage backed securities trades that were expected to settle in October, November and December.
“This protocol provides welcome certainty and a way to terminate trades in an orderly fashion, said Joe Sack,” SIFMA managing director. “By working with the SIPC and SIPC Trustee, buy side firms have come up with a solution to terminate billions of dollars in trades that would have otherwise required firms to navigate the bankruptcy system,” according to Sack.
The protocol contains the essential components that provided a level of comfort to asset managers wishing to terminate forward settling trades done with Lehman that do not clear through the Fixed-Income Clearing Corporation (FICC). Both the protocol and the termination agreement can be found on SIFMA’s web site at http://www.sifma.org/asset_management/asset_management.html