Buy side entities should carefully review such agreements as their ISDA Master Agreements, Securities Lending Agreements and Repurchase Agreements, to name a few, for any Article 55 BRRD provisions. Article 55 BRRD is the EU’s Bank Recovery and Resolution Directive (BRRD) which essentially authorizes the European government to write down and convert amounts owed by a failing institution. For buy side entities whose agreements are governed by NY law and have historically operated under safe harbor protections under the US Bankruptcy Code, where applicable, accepting BRRD affects the rights afforded under the ISDA and related agreements as well as applicable law. Contact your Derivatives Attorney for a full breakdown of the credit and bankruptcy risk.
