The International Swaps and Derivatives Association last week unveiled a protocol that will allow cash settlement across a broad spectrum of credit derivative products - including single name index tranches and plain vanilla credit derivatives. The protocol is essentially the same as those used for half-a-dozen credit events since the May 2005 bankruptcy of automotive supplier Collins & Aikman Corp. to settle covered index trades.

The protocol is "on the shelf" until the first credit event occurs, said Louise Marshall, spokeswoman for the ISDA, and will be incorporated into the new set of credit derivative definitions the ISDA plans to release next year. The definitions will also address dispute resolution.

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