Y2k problems may require legal grace period - ISDAgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Y2K problems may require legal grace period -ISDA 07:33 a.m. Sep 15, 1999 Eastern
LONDON, Sept 15 (Reuters) - The International Swap and Derivatives Association said on Wednesday it may recommend that its members apply a three-day grace period to pursue any payment or settlement problems due to Y2K issues.
Robert Pickel, general counsel for ISDA, the industry body for the multibillion dollar over the counter derivatives market, said at a press briefing that any payment problems which were due to Y2K glitches might only last a short period of time.
Computers which are not programmed to recognise the switch to a 2000 date might malfunction and cause problems with electronic money transfers and other data transactions.
``We may considering supporting a three-day waiting period to enforce failure to pay or default,'' he said at a press briefing.
He said similar recommendations had already been made by foreign exchange lawyers. This issue is especially relevant to foreign exchange because of the large volumes of cross-border settlements.
ISDA plans to publish a document outlining how Y2K issues may apply to financial market instrument documentation by the end of September or early October, he said.
This would make it easy for users to look up a particular instrument, such as equity derivatives or swaps, and see how any Y2K-related glitches might activate different provisions.
The financial market turmoil in 1998 highlighted a number of stress areas in such documentation which ISDA was currently looking at, with the aim of coming up with recommendations.
These were issues relating to master agreements, issues about triggering force majeure clauses, valuation and closing out provisions and collateral documentation.
((Aline van Duyn, London Capital Markets, +44 171 542 6176, fax +44 171 542 5285, aline.vanduyn+reuters.com))
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