The ISDA Determinations Committee is a standing panel of fifteen major financial firms that decides whether a “credit event” has occurred on a company or government named in credit default swap contracts. Its rulings are binding on every standard CDS trade that references the same borrower, so protection buyers and protection sellers across the market get one answer instead of arguing case by case. Before the committee existed, individual banks and investors routinely disagreed about whether a default had actually happened, and those disputes were expensive and destabilizing. The committee centralizes that factual call.
Credit default swaps work like insurance against a borrower’s default. If the borrower experiences a defined credit event, the protection seller owes the protection buyer a payout tied to how much the borrower’s debt is worth after the event. Everything downstream — whether a payout is owed, how much, when — depends on someone deciding whether the trigger was pulled. That someone is the committee.
How the Committee’s Rulings Bind Your Contract
The committee’s authority is contractual, not regulatory. It flows through the credit derivatives definitions that each trade confirmation incorporates by reference. When two parties execute a standard credit default swap, their confirmation typically incorporates the 2014 ISDA Credit Derivatives Definitions, and those definitions bind both sides to the committee’s rulings on credit events, successor entities, and auction mechanics.1Credit Derivatives Determinations Committees. 2018 Credit Derivatives Determinations Committees Rules Older transactions written under the Updated 2003 Definitions were pulled into the same regime through protocol supplements.
Because the authority is opt-in at the product level, a party could theoretically negotiate a bespoke confirmation that excludes the standard definitions. Almost nobody does. A contract that opted out would be harder to trade, harder to value, and harder to settle.
Who Sits on the Committee
Each regional committee has fifteen voting members: ten dealers (eight global and two regional) and five non-dealer, buy-side firms such as asset managers and hedge funds.2International Swaps and Derivatives Association. Credit Derivatives Determinations Committees Dealers hold a numerical majority, but the voting thresholds prevent any small bloc from carrying an outcome alone.
Global dealer seats go to the eight firms with the highest CDS trading volume as reported to the Depository Trust and Clearing Corporation. There is no fixed minimum volume; DTCC ranks eligible dealers and the top eight get seats. Non-dealer members must clear an explicit bar: at least $1 billion in assets under management and at least $1 billion in aggregate notional credit derivative positions.1Credit Derivatives Determinations Committees. 2018 Credit Derivatives Determinations Committees Rules Seats are selected annually, so the roster shifts as trading activity changes.
Separate committees operate in five regions: the Americas, EMEA (Europe, Middle East, and Africa), Asia excluding Japan, Japan, and Australia-New Zealand.3International Swaps and Derivatives Association. Determinations Committees When a question is submitted, the relevant regional committee convenes. Non-voting consultative members may attend to provide technical input.
What Counts as a Credit Event
The committee’s jurisdiction is limited to specific triggers defined in the 2014 ISDA Credit Derivatives Definitions. Financial distress alone does not qualify. The recognized categories are:
- Bankruptcy. The reference entity enters formal insolvency proceedings, is dissolved, or becomes unable to pay its debts.
- Failure to Pay. The reference entity misses a payment of principal or interest after any applicable grace period. The missed amount must meet a minimum threshold, which defaults to $1 million if the contract does not specify otherwise.4International Swaps and Derivatives Association. 2014 ISDA Credit Derivatives Definitions
- Restructuring. Debt terms change in a way that hurts creditors — a reduced interest rate, extended maturity, or subordination — driven by declining creditworthiness.
- Repudiation or Moratorium. Typically a government borrower officially refuses to honor debts or declares a suspension of payments.
- Obligation Acceleration and Obligation Default. Technical loan-agreement breaches that cause debts to become immediately due. Standard North American corporate contracts often exclude these, but they can appear elsewhere.
- Governmental Intervention. Added in the 2014 Definitions. It covers situations where a government authority forces losses on creditors outside normal insolvency, as happened during the European banking crises when regulators wrote down bank bonds by decree.
The committee can only rely on publicly available information — regulatory filings, press releases, court documents — to decide whether one of these events actually occurred. Private communications and rumors are not enough.
The 60-Day Backstop
A credit event question is only valid if the underlying event occurred within 60 calendar days before the request was submitted. This “Credit Event Backstop Date” prevents stale claims from disrupting the market months or years later.5International Swaps and Derivatives Association. The Credit Event Process The lookback runs from the date the committee receives the request.
How a Question Moves Through the Process
Any eligible market participant can start the process by submitting a question through the ISDA web portal. The submission must identify the specific reference entity, the relevant debt obligation, and the type of credit event alleged, and it must include publicly available supporting evidence.5International Swaps and Derivatives Association. The Credit Event Process The ISDA Secretary runs an administrative check to confirm the submission is complete; that is procedural, not a judgment on the merits. Once cleared, the question is published online and forwarded to the relevant regional committee. That transparency is deliberate. Anyone with a position in the reference entity can follow the question and prepare for a possible auction.
Before the committee can vote, it needs a quorum. The initial requirement is 80% of voting members — at least twelve of the fifteen — including at least three non-dealer members. If the first meeting falls short, quorum drops to 60% for the next meeting, and to 50% after that.1Credit Derivatives Determinations Committees. 2018 Credit Derivatives Determinations Committees Rules That cascade prevents absent members from blocking decisions indefinitely.
Once quorum is established, most significant determinations require a supermajority. Dismissing a question, resolving an interpretation issue, and determining whether a credit event occurred all sit at that threshold.1Credit Derivatives Determinations Committees. 2018 Credit Derivatives Determinations Committees Rules Procedural matters, like rephrasing a question, need only a simple majority. When a vote reaches majority but not supermajority, the question can be referred to an external review panel of three independent experts drawn from a pre-approved pool. A decision by that panel requires the support of at least two of the three.6International Swaps and Derivatives Association. ISDA Credit Derivatives Determinations Committees Rules
Conflicts of Interest
Committee members are not required to recuse themselves from a vote because they hold a financial position in the reference entity. The only circumstance that triggers mandatory non-participation is when the committee member itself, or an affiliate, is the reference entity under discussion.7International Swaps and Derivatives Association. DC Review Report A bank that sold protection on a company votes on whether that company experienced a credit event. The stated rationale is that every major dealer has positions on both sides, and excluding anyone with exposure would leave the room empty. Whether that logic still holds is a central question in the current reform process.
What Happens After a Credit Event Is Declared
A finding that a credit event occurred triggers a cash-settlement auction that sets a single recovery price for the reference entity’s debt. That price determines how much protection sellers pay protection buyers across every linked contract. If the auction settles at 20 cents on the dollar, protection sellers pay 80 cents per dollar of notional.
The auction runs in two stages. In the first, participating dealers submit two-way markets for the reference entity’s deliverable obligations, and any market participant with physical settlement requests submits those as well. The auction administrator calculates an Initial Market Midpoint from the best dealer submissions and calculates the net open interest: the difference between all buy requests and all sell requests for actual bonds or loans. In the second stage, the administrator matches that open interest against limit orders. The price of the last limit order used to fill the open interest becomes the final price, subject to a cap that keeps it from diverging too far from the Initial Market Midpoint.8ICE (Intercontinental Exchange). Credit Event Auction Primer
The timeline from credit event determination to auction completion involves several procedural steps, including publication of an initial list of deliverable obligations within three calendar days of the auction resolution and a final list two days later.5International Swaps and Derivatives Association. The Credit Event Process The committee can adjust these timelines by an 80% vote if circumstances require.
Succession Decisions
The committee’s authority extends beyond credit events. When a company referenced in outstanding CDS merges with another firm, splits into pieces, or transfers its debt elsewhere, someone has to decide which surviving entity the contracts now reference. The committee makes that call. Under the 2014 Definitions, if a single entity assumes all obligations of the original reference entity and that original entity ceases to exist or is being dissolved, the successor is treated as a “Universal Successor.” To block manipulation through staged transfers, the rules aggregate individual debt transfers that occur as part of a single plan when calculating whether the relevant thresholds have been crossed.
Determinations That Have Tested the System
The Windstream case in 2019 showed how contentious the committee’s work can get. Aurelius Capital, an activist investor, engineered a technical covenant breach on Windstream’s bonds and then asked the committee to declare a failure-to-pay credit event. Windstream disputed that any default had occurred, calling the allegations “meritless” and “baseless.” When the question first reached the committee in December 2017, the members declined to find a credit event, largely because the underlying dispute had not yet been resolved in court.9ISDA Credit Derivatives Determinations Committees. Windstream Services LLC Failure to Pay Credit Events The case came back in 2019 after a federal court ruled against Windstream, and the committee determined that a credit event had occurred. The episode raised pointed questions about firms that deliberately trigger the events they then profit from.
Russia’s 2022 credit event determination tested the committee in a different way. After Western sanctions cut Russia off from international payment systems, the country had the financial capacity to pay its debts but was blocked from doing so. The committee had to decide whether that constituted a failure to pay under the definitions, separate from any question of willingness.
Reforms in Progress
ISDA launched a comprehensive review of the committee structure in 2024 and published the consultation results in September of that year. The proposals are substantial: reducing dealer membership from ten to eight, cutting non-dealer seats from five to four, and appointing up to three independent members, with one serving as chairperson. The reforms would also create a separate governance body to oversee DC operations, require the committee to publish reasons for all material decisions, and allow individual questions to be referred to an independent panel by simple majority rather than only after a failed supermajority.10International Swaps and Derivatives Association. ISDA Publishes Results of DC Review Consultation
In May 2025, ISDA published a more detailed governance committee proposal envisioning a body of 15 to 20 senior market participants overseeing the DCs.11International Swaps and Derivatives Association. ISDA Publishes Governance Committee Proposal for CDS Determinations Committees The direction of travel is more transparency, more independence, and fewer situations where the firms deciding whether a credit event occurred are the same firms that stand to gain or lose billions from the answer.