New French Master Agreement relating to derivatives

On 25 June 2013, the French Banking Federation (FBF) has published a new version of its Master Agreement relating to transactions on forward financial instruments (the FBF Master Agreement), the latest version of which was published in 2007.

The amendments introduced by the 2013 FBF Master Agreement can be divided into two main categories:

• new provisions incorporating the requirements of the Regulation (EU) 648/2012 of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR) into the FBF Master Agreement, in particular the risk mitigation requirements that are imposed on parties to OTC derivative contracts which are not cleared by a central counterparty, the mandatory clearing obligation of some OTC derivative contracts and the obligation to report derivative contracts to trade repositories; and
• other provisions introducing various substantial changes to the FBF Master Agreement, including in particular greater flexibility in the calculation of the Replacement Value (Valeur de Remplacement) of the terminated transactions, reduction of the grace period for the purposes of a failure to pay or deliver to one business day instead of three business days and proposed template Schedule to the FBF Master Agreement.

In addition, the FBF has published the following documents which enable parties to update their FBF documentation already in place:

• a standard form of amendment agreement enabling parties to existing 2007 FBF Master Agreements to incorporate the main changes introduced by the 2013 version; and
• three EMIR Addendums which are designed to incorporate into an existing FBF Master Agreement (in its 2007, 2001 or 1994 version) the EMIR related provisions introduced by the 2013 version.

Links to the 2013 version of the FBF Master Agreement and related documentation mentioned above can be found here (English version) or here (French version).