The International Swaps and Derivatives Association has completed its first test of a standard settlement protocol for credit derivatives transactions and is now seeking formal feedback from the industry. The protocol, which covers the full range of credit derivatives, including single name trades, baskets, and bespoke tranches among others, was tested on Dura Automotive Systems, which filed for bankruptcy protection in October. ISDA completed the auction process twice to determine the cash settlement price for the subordinated and senior Dura bonds Nov. 28. The cash settlement date is Dec. 12. A total of 327 participants, representing $77 million, adhered to the protocol. The physical settlement date is Dec. 4.

Kimberly Summe, general counsel, said ISDA received positive feedback from some participants and is pleased with the outcome of the auction, but wants will solicit more formal comments through the end of the year. "We still have follow-up work, which is touching base with market participants to make sure we are aware of their views and to see if people want to incorporate the approach into a new definitions booklet next year. Or do they want another test case? It's a decision for the trading community as to whether they think it would be worth stress testing the methodology one more time."