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Credit Default Swap Agreement for Singapore

Credit Default Swap Agreement Template for Singapore

A Credit Default Swap Agreement under Singapore law is a sophisticated financial contract that enables the transfer of credit risk between parties. Governed by Singapore's Securities and Futures Act and regulated by the Monetary Authority of Singapore, this agreement establishes the terms under which one party (the protection seller) agrees to compensate another party (the protection buyer) in the event of a credit default or other specified credit event relating to a reference entity. The agreement includes detailed provisions for premium payments, credit events, settlement mechanisms, and regulatory compliance requirements specific to Singapore's financial markets.

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What is a Credit Default Swap Agreement?

The Credit Default Swap Agreement serves as a crucial risk management tool in Singapore's financial markets. This document is typically used when parties seek to transfer credit risk exposure without transferring the underlying asset. The agreement incorporates Singapore's regulatory requirements, including MAS guidelines and reporting obligations, while following international ISDA standards. It specifies credit events triggering protection, premium payment structures, settlement terms, and compliance with Singapore's derivatives trading framework. This contract type is particularly relevant given Singapore's position as a major financial hub, with specific provisions addressing local legal and regulatory requirements.

What sections should be included in a Credit Default Swap Agreement?

1. Parties: Identification of the protection buyer and protection seller

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used tHRoughout the agreement including Credit Events

4. Reference Entity: Entity whose credit risk is being transferred

5. Credit Events: Specific events triggering payment obligations

6. Settlement Terms: Method and process of settlement following a Credit Event

7. Premium Payments: Payment terms, frequency, and calculation methods

What sections are optional to include in a Credit Default Swap Agreement?

1. Multiple Reference Entities: Additional provisions for when the CDS covers multiple entities, typically used for portfolio or basket CDS agreements

2. Restructuring Provisions: Specific terms for restructuring events when parties want to include restructuring as a Credit Event

3. Additional Termination Events: Specific circumstances allowing early termination beyond standard termination events

What schedules should be included in a Credit Default Swap Agreement?

1. Schedule 1: Reference Obligation Details: Specific details of the underlying obligation(s)

2. Schedule 2: Notice Requirements: Forms and procedures for various notices under the agreement

3. Appendix A: Credit Event Definitions: Detailed definitions of included Credit Events

4. Appendix B: Calculation Agent Provisions: Terms governing the role and responsibilities of the Calculation Agent

5. Appendix C: Form of Credit Event Notice: Standard form for Credit Event notifications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Singapore

Publisher

Genie AI

Document Type

Credit Agreement

Sector

Banking

Cost

Free to use

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