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ISDA To Hold First Greek Default Determination Hearing On March 1

Tyler Durden's picture


For a while there it seemed that together with the LTRO and the Bernanke testimony, tomorrow's event trifecta would be joined by ISDA, which it had previously been rumored would make a decision on whether a credit event (read CDS trigger) had occurred in the context of Greece, and specifically following the ECB's stripping of its own bonds under some arcane exchange offer that only the ECB was privy to (this is not a determination whether a credit event has taken place related to the PSI - that will take place in late March). According to a just released PR, this won't happen, and instead ISDA will hold the meeting at 11 GMT on Thursday, March 1, the day after the LTRO, and announce everything was voluntary and by the books, just to avoid overloading the algos with bullish news at the same time (recall that the LTRO announcement will take place at 11:15 CET). In this way, the upside love will be spread over two days, which should hopefully result in another 30 ES point, as the headline scanning aglos no longer care what the headlines actually say, as long as there are headlines. Remember: when dealing with a bipolar Atari 2600 - quantity trumps quality any time, especially when coming off the biggest short-term central bank liquidity infusion in markets in history.

From ISDA:

ISDA Determinations Committee Accepts Question Related to a Potential Hellenic Republic Credit Event


LONDON, February 28, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA), as secretary to the Determinations Committees (the DCs), today announced that a question relating to a potential credit event with respect to the Hellenic Republic has been submitted to, and subsequently accepted for consideration by, the EMEA Determinations Committee.                   


In accordance with the Determinations Committee Rules, a meeting will be held at 11AM GMT on Thursday, March 1 to determine whether a credit event has occurred.


Further information regarding the question is available at


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Tue, 02/28/2012 - 16:42 | 2205431 maxmad
maxmad's picture

I asked for a little off the top, not a crew cut!  Bitchez!

Tue, 02/28/2012 - 16:49 | 2205477 bdc63
bdc63's picture

Webster's is going to have to update their definition of "voluntary" in their next release ...

Tue, 02/28/2012 - 16:54 | 2205525 JPM Hater001
JPM Hater001's picture

From Merriam Webster site:


1: proceeding from the will or from one's own choice or consent

2: unconstrained by interference : self-determining 3: done by design or intention : intentional <voluntary manslaughter>   No, I think they have it pretty well covered.


Tue, 02/28/2012 - 16:57 | 2205539 Conrad Murray
Conrad Murray's picture


Tue, 02/28/2012 - 17:18 | 2205608 Manthong
Manthong's picture

Ave Impurator! Volunturi te salutant!

Tue, 02/28/2012 - 17:07 | 2205581 williambanzai7
williambanzai7's picture


Tue, 02/28/2012 - 17:34 | 2205701 Jake88
Jake88's picture

Well I suppose they will be choosing of their own free will to obey the new law. Totally FUBAR.

Tue, 02/28/2012 - 17:04 | 2205567 battle axe
battle axe's picture

I am surprised that the ISDA has time from blowing the banks to make any sort of announcement....fucking whores....

Tue, 02/28/2012 - 17:20 | 2205639 PaperBear
PaperBear's picture

Yep, they are too busy f**king whores and paying them with the CDS premiums.

Tue, 02/28/2012 - 16:44 | 2205442 ZeroPower
ZeroPower's picture

Theyre walking along a very fine line here. The GRE basis package is basically at the highs for the year implying the CDS still do have some value (in reality, more than the bonds!) so unless ISDA wants every single (sovereign) CDS to be shunned from here on, they have to give those long the package some incentive to continue to use protection via the swaps.

Tue, 02/28/2012 - 17:00 | 2205548 slaughterer
slaughterer's picture

I cannot see how the ISDA can make a decision already on 1 March.   Another meeting will have to take place afterwards.  The algos will love this first meeting no doubt. 

Tue, 02/28/2012 - 17:12 | 2205603 bdc63
bdc63's picture

... they made their decision a year ago ... there will be no declaration of default by the ISDA.  Not on March 1st, not in 6 months, not ever ...

Tue, 02/28/2012 - 16:44 | 2205449 Moneyswirth
Moneyswirth's picture

Right on schedule for the March 20-23(?) earthquake/Greek default/German takeover/Middle East war timeline.

Yes, this IS 2012, after all.

Tue, 02/28/2012 - 16:45 | 2205455 johngaltfla
johngaltfla's picture

And of course since "SD" is considered too confusing and not recognized by the ISDA the paper will be redeemable at "par" at Makov Jakov's Bank and Massage Emporium in downtown Athens.

The only joke bigger than the ISDA is the FASB.

The problem for the ISDA is not going to be Greece but Portugal, Ireland, Hungary, and ________________ (Fill in the blank of your favorite PIIGS nation or major bank from those nations).

Tue, 02/28/2012 - 16:52 | 2205504 agent default
agent default's picture

The problem with the ISDA is that if they call it a credit event the issuers will have to cover fro billions, CDSs on the rest of the periphery will rise leading to higher yields and ultimately more sovereign defaults.  If they don't call it a credit event, the CDS market comes apart, CDS holders have to write down their CDS positions together with any Greek bonds they hold, everybody realizes that sovereign bonds cannot really be hedged, leading to higher yields and more sovereign defaults.  Fucked if you, do fucked if you don't.

Tue, 02/28/2012 - 16:56 | 2205529 johngaltfla
johngaltfla's picture

The further they squeeze the liquidity out of the CDS market, the greater the risk for an event which will make 2008 and 1987 PALE by comparison. It's one thing to fuck with the stock market and manipulate it.

The credit market however is much larger, more dagnerous, and will bite them in the ass if they keep juggling fire, nitro glycerine, and piles of insolvent paper.

Tue, 02/28/2012 - 17:34 | 2205617 Tuffmug
Tuffmug's picture

The issue before ISDA is the ECB's special sweetheart exchange deal and subordination of other bond holders.If they don't call this a default then ISDA is out of business as CDS will be considered worthless. Nobody will play with a Bookie who welches on a bet.

Tue, 02/28/2012 - 20:38 | 2206300 Buck Johnson
Buck Johnson's picture

Your totally correct and I will add another thing also.  If they don't call Greece a credit event, they ISDA might be taken to court over CDS holders saying there was one and two, other financial institutions who sold bonds that where told there institution was a credit event even though they are in better shape than Greece.

Tue, 02/28/2012 - 21:50 | 2206467 whisperin
whisperin's picture

I actually think that the sale of fraudulent insurance contracts by a group to collect premia and then renig on said coverage might constitute racketeering. The possibility of a RICO suit might not be out of the question.

Tue, 02/28/2012 - 16:46 | 2205456 dannyboy
dannyboy's picture

What a gigantic waste of time that is going to be.

Tue, 02/28/2012 - 16:51 | 2205457 hedgeless_horseman
hedgeless_horseman's picture



ISDA Determinations Committee

Who ARE these guys?


Voting Dealers
Bank of America / Merrill Lynch
BNP Paribas
Credit Suisse
Deutsche Bank
Goldman Sachs
JPMorgan Chase Bank, N.A.
Morgan Stanley
Société Générale

Consultative Dealers
The Royal Bank of Scotland

Voting Non-dealers
BlueMountain Capital (Second Term Non-dealer)
Citadel LLC(First Term Non-dealer)
D.E. Shaw Group (First Term Non-dealer)
Elliott Management Corporation (Third Term Non-dealer)
Pacific Investment Management Co., LLC (Second Term Non-dealer)


Does anyone know how to pronounce the word for, "Conflict of Interest," in European?  Is it Ice-Dah, Iss-Dah, or maybe Iss-Day?

Tue, 02/28/2012 - 16:52 | 2205503 Moneyswirth
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Tue, 02/28/2012 - 17:01 | 2205550 Conrad Murray
Conrad Murray's picture

1. Drink Whiskey
2. Select number from:
3. ?????

+9000 internets if recorded and posted

Tue, 02/28/2012 - 17:05 | 2205568 a growing concern
a growing concern's picture

I think step 3 should involve an internet sound board, preferably Arnold Schwarzenegger:


"Get to zee chopp-ah!"

Tue, 02/28/2012 - 17:21 | 2205583 hedgeless_horseman
hedgeless_horseman's picture



3.  Call the ISDA's Washington office* and ask, "Did any ISDA Determination Committee member firm ever write CDS contracts on Hellenic debt?"



*Please note that the Washington Office focuses on regulatory affairs only.

Tue, 02/28/2012 - 16:53 | 2205512 alien-IQ
alien-IQ's picture

"Does anyone know how to say, "Conflict of Interest," in European?"


The same way we say it in America: Standard Operating Procedure. (AKA business as usual)

Tue, 02/28/2012 - 16:54 | 2205517 Everybodys All ...
Everybodys All American's picture

why that of course would be the banking cartel.

Tue, 02/28/2012 - 16:58 | 2205538 Seize Mars
Seize Mars's picture


Tue, 02/28/2012 - 17:08 | 2205590 Jonas Parker
Jonas Parker's picture

Wow! All the whores of the world gathered in one whorehouse! Whoda thunkit?

Tue, 02/28/2012 - 17:28 | 2205680 SmoothCoolSmoke
SmoothCoolSmoke's picture

Yeah.  Where's a good neutron bomb when ya need one.

Tue, 02/28/2012 - 16:46 | 2205462 a growing concern
a growing concern's picture

So the banks who wrote these 10s of trillions of CDS protection on Greece are the same banks who sit on the ISDA determination committee and will decide whether their trillions of dollars of CDSs will be triggered, essentially deciding whether or not they (the CDS-writing banks) go bankrupt or not?  I wonder what they'll decide???

Tue, 02/28/2012 - 16:49 | 2205486 bdc63
bdc63's picture

It's a real clif-hanger ...

Tue, 02/28/2012 - 17:07 | 2205582 tekhneek
tekhneek's picture

Yes and Corzine's almost done delivering the final $100 bill to the CFTC to cover the last bit of money lost.

Oh wait, they still haven't found a fucking cent.

/sarc off

Tue, 02/28/2012 - 22:40 | 2206599 Falkor
Falkor's picture


Tue, 02/28/2012 - 16:50 | 2205493 johngaltfla
johngaltfla's picture

To have another party in Switzerland with a bunch of hookers and stiff the "investors" who hold all the paper at the banksters of course. Sort of like what they did to GM and Chrysler bondholders.

Tue, 02/28/2012 - 16:46 | 2205463 JPM Hater001
JPM Hater001's picture

Row Row Row your boat gentle...

Whats that...they want a committee to decide if we get a paddle?

Tue, 02/28/2012 - 16:48 | 2205473 edotabin
edotabin's picture

No event. The end.

Tue, 02/28/2012 - 17:59 | 2205816 WonderDawg
WonderDawg's picture

No event is most definitely not the end. No event means CDS are worthless, therefore sovereign debt cannot be hedged, therefore the bond market becomes one huge clustefuck and the bond vigilantes will come out in force.


Tue, 02/28/2012 - 16:49 | 2205485 Chupacabra-322
Chupacabra-322's picture

Lord James of Blackheath $15,OOO,OOO,OOO,OOO FRAUD EXPOSED February 16 2012

Lord James of Blackheath, House of Lords February 16 2012
Breaking news Lord James of Blackheath has spoken in the House of Lords holding evidence of three transactions of 5 Trillion each and a transaction of 750,000 metric tonnes of gold and has called for an investigation.

I think there are three possible conclusions that may come from it. I think there may have been a massive piece of money laundering committed by a major government which ought to know better and that it has effectively undermined the integrity of the British bank the Royal Bank of Scotland, in doing so. The second alternative is that a major American department has an agency that has gone rogue on it because it has been wound up and has created a structure out of which they are seeking to get at least 50 billion Euros as a payoff. And the third possibility is that this is an extraordinarily elaborate fraud which has not been carried out but which has been prepared in order to provide a threat to one government or more if they don't pay them off. So there are three possibilities and this all needs a very urgent review.

My Lords, it starts in April and May of 2009, with the alleged transfer to the United Kingdom, to HSBC of a sum of 5 trillion dollars and seven days later, in comes another 5 trillion dollars to HSBC, and then 3 weeks later another 5 trillion. 5 trillion in each case. Sorry. A total of 15 trillion dollars is alleged to have been passed into the hands of HSBC for onward transit to the Royal Bank of Scotland and we need to look at where this came from and what the history of this money is. And I have been trying to sort out the sequence by which this money has been created and from where it has come from for a long time.

Tue, 02/28/2012 - 16:50 | 2205489 alien-IQ
alien-IQ's picture

given the market moving bullish news/statements to be unleashed in the next two days, it looks like week 9 of consecutive /ES rising is guaranteed.

maybe I should start looking for SPY $500 April calls:-(

Tue, 02/28/2012 - 16:50 | 2205490 firstdivision
firstdivision's picture

Feb 29

  • Bernanke says QE3 $3T approved.
  • S&P Upgrade Greece to A+

Mar 1

  • ISDA Greek hearing postponed indefinitely due to Greece is saved!

Jun 5

  • Greece defaults.
Tue, 02/28/2012 - 16:52 | 2205500 clones2
clones2's picture

So - If my insurance isn't worth anything....  Why should I risk buying the bond in the first place???

Could be the nail in the coffin for Spain and Portugal...

Tue, 02/28/2012 - 17:04 | 2205530 carbonmutant
carbonmutant's picture

All of the Smoke and Mirrors over Greece has been designed to prevent a CDS triggering event.

Nobody cares about Greece defaulting. They do care that the "CDS Ponzi Oval" not be exposed.

Tue, 02/28/2012 - 16:58 | 2205544 Boilermaker
Boilermaker's picture

Oh, GOLLY, what WILL they decide?

You have to be fucking joking.

Tue, 02/28/2012 - 17:01 | 2205558 Ned Zeppelin
Ned Zeppelin's picture

ISDA Determinations Committee Answers Question Related to a Potential Hellenic Republic Credit Event


LONDON, March 2, 2012 – The International Swaps and Derivatives Association, Inc. (ISDA), as secretary to the Determinations Committees (the DCs), today announced that it has answered a question relating to a potential credit event with respect to the Hellenic Republic which had been submitted to, and subsequently accepted for consideration by, the EMEA Determinations Committee.


In accordance with the Determinations Committee Rules, a meeting was held at 11AM GMT on Thursday, March 1 to determine whether a credit event has occurred, whereupon the ISDA's secret Magic 8 Ball was brought out of storage. After a couple of spins to "get it warmed up," the Committee spun Magic 8 Ball one more time, and determined that Magic 8 Ball said "no default," and thanked everyone for their interest.  Issuers of credit default swaps on Hellenic debt worldwide breathed a collective sigh of relief and returned to their wood-paneled offices to once again thank their lucky stars. 


Further information regarding the question and ISDA's Magic 8 Ball answer is available at

Tue, 02/28/2012 - 17:14 | 2205610 tekhneek
tekhneek's picture

LOL! Brilliant!

The sad part is, it's true.

Tue, 02/28/2012 - 23:40 | 2206775 geekgrrl
geekgrrl's picture

The key feature of ISDA's Secret Magic 8 Ball, is, of course, that all 20 sides of the die say "No Default".

Tue, 02/28/2012 - 17:04 | 2205564 monopoly
monopoly's picture

Only in America can the wolves guard the hen house. 

Tue, 02/28/2012 - 17:08 | 2205588 a growing concern
a growing concern's picture

Or like a T-rex guarding a nursery.

Tue, 02/28/2012 - 17:15 | 2205618 tekhneek
tekhneek's picture

"Guarding" is the keyword there.

Tue, 02/28/2012 - 17:07 | 2205585 Big Ben
Big Ben's picture

It seems to me that a credit event should not be declared until Greece actually fails to make a payment that was promised under the original terms of the bond. Retroactive CAC's shouldn't be a credit event until they are actually exercised. So I would guess that CD-day is still weeks away.

Tue, 02/28/2012 - 17:21 | 2205642 DavidC
DavidC's picture

It doesn't matter what they do, at some point it will come apart, simply because the amount of debt in the system is unsustainable. It, mathematically, cannot carry on, regardless of what these buffoons do in the short or medium term.

All China, Russia and India (or indeed, anyone else like Iran) have to do is sit back and watch it all unfold in front of them. Because, although they may also have economic problems, they are nothing compared to the insanity of the USA and Western Europe.


Tue, 02/28/2012 - 17:21 | 2205649 PaperBear
PaperBear's picture

Book your seat now for the firework display.

Tue, 02/28/2012 - 17:22 | 2205651 spartan117
spartan117's picture

Jim Sinclair, right again.

Tue, 02/28/2012 - 17:36 | 2205709 turtle777
turtle777's picture

The Greek PSI is "about as voluntary as a confession was voluntary in the Spanish inquisition"

Commerzbank CEO Martin Blessing


Tue, 02/28/2012 - 17:41 | 2205729 Jake88
Jake88's picture

If they don't pay then anyone would be completely stupid to ever buy a CDS. Perhaps this will result in some sanity and lead to the outlawing of the CDS. Just kidding. I don't really expect any sanity to set in soon.

Tue, 02/28/2012 - 18:32 | 2205946 slackrabbit
slackrabbit's picture

So which hedge fund decides its court time on the credit insurance industry.

Tue, 02/28/2012 - 18:32 | 2205948 RSDallas
RSDallas's picture

These crooks need to hold a hearing on this????  You know, my cousin ran over the family dog and it died and so now we are holding a hearing to see if the dog is injured.  Freaking morons!

Tue, 02/28/2012 - 19:08 | 2206068 Ungaro
Ungaro's picture

In order to erect a thin veil of legitimacy, the ISDA appoints a special investigator to study the relevant facts and report back to the Committee in 60 days. The Committee will meet next on May 2 since Mayday is a holiday in Europe.

Could this Hellenic mess just be a dress rehearsal for Portugal, next up? Could this Greek tragedy be staged to show the serfs who is really in charge? Do Greeks like to wake up to the sounds of German whips cracking? Is there no man in the Greek government with the cojones to tell their creditors to go fuck themselves instead of the Greek people???

Tue, 02/28/2012 - 19:31 | 2206141 bobola
bobola's picture

To the ISDA; "No, there is nothing out of the ordinary going on with Greece - the tax collecting system is still broken, tax avoidance is still a national pastime, and the welathy have already moved their money out of the country.  Carry on"

Anyone know who supplies tear gas to the Greek govt..??  I see an increase in their revenue coming.

Tue, 02/28/2012 - 20:55 | 2206332 Bansters-in-my-...
Bansters-in-my- feces's picture


Thats a group of criminal bankers, know.....more bankers.

Tue, 02/28/2012 - 21:35 | 2206432 de Cosmos
de Cosmos's picture

Les jeux sont faits - Rien ne va plus.

Wed, 02/29/2012 - 05:17 | 2207126 TooRichtoCare
TooRichtoCare's picture

So if there's a conflict of interest, our job is simply to find out what event benefits the Voting Committee the most, and trade accordingly.  

So the question is, which way do all these dealers who sit on the commiittee want this decision to go? Do you have billions of dollars worth of bond exposure to shinola sovereigns like Greece etc having been hedged by BUYING protection? This is what the big hullabaloo was during the summer, specifically in reference to Morgan Stanley, with the suggestion having been that they had humungous bond exposure to sovereigns and that their CDS hedges were worthless because you'll never get an official "credit event" ruling.  In this scenario, you'd think the likes of Morgan Stanley would WANT to have the CDS market re-established as a bone fide hedge, as it would make their NET exposure more relevant than the current excessive focus on their Gross exposure.  

On the other hand, there seems to be an implication that hundreds of firms have sold protection, and have taken in ridiculous sums of premiums, and just like the option seller who sells calls or puts to get the premiums, they want the options to expire worthless...or in this case, they want ISDA to declare that the Greek default is not a credit event, thereby absolving them of having to pay out anything to all the protection buyers, and thereby allowing them to fully enjoy all the premium money they accumulated in the last few years.

So which way does the rigged market lean?  Do most of these guys on the voting commiittee have long protection positions, or have most of them been selling protection to scoop up premium income?

Answer that question and then we'll know with 100% certainty what the Thursday vote from ISDA will be.

Wed, 02/29/2012 - 06:28 | 2207181 rhs
rhs's picture

Hmm, do the holdouts call their bluff and wait for a full default? Do they see if Greece decides to hold them to the below 75% threshhod? They don't have much to lose, but theres a lot of pressure from a sides. maybe selected payoffs will mean the difference. 

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