Last month the Board of Governors of the Federal Reserve System (the “Board”) issued proposed new rules (the “Proposed Rules”) intended to reduce the potential risks posed to the U.S. financial system by too-big-to-fail banks.1 The Proposed Rules would, among other things, require certain systemically important banks to include in their contracts provisions that would significantly limit their counterparties’ default rights in over-the-counter swaps, repurchase and reverse repurchase agreements, securities lending and borrowing transactions, commodity contracts, and forward agreements. The Proposed Rules are open to public comment until August 5, 2016.

Contemporaneously with the Board’s release of the Proposed Rules, the International Swaps and Derivatives Association, Inc. (“ISDA”) released its ISDA Resolution Stay Jurisdictional Modular Protocol (the “JM Protocol”), intended to permit market participants to comply with the Proposed Rules (when adopted in their final form) and similar rules of foreign jurisdictions.