NEW YORK, Monday, September 15, 2008 – The International Swaps and Derivatives Association (ISDA) issued the following statement with regards to recent industry developments, including the Chapter 11 Bankruptcy Petition filing by Lehman Brothers Holdings Inc.

 “The current environment is obviously a difficult period for industry participants,” said Eraj Shirvani, ISDA’s chairman and managing director and head of European credit, Credit Suisse.  “ISDA believes, however, that the industry’s progress in building a strong foundation for our business will enable it to successfully address current issues.  The privately negotiated derivatives business – including the credit default swaps business – continues to function well in these times.”

  “Over the past 25 years, ISDA and the privately negotiated derivatives business have developed a robust, resilient industry framework and infrastructure,” said Robert Pickel, the Association’s chief executive officer.  “Our collective efforts to identify and reduce the sources of risk in our business during this period drove the creation of the ISDA Master Agreement, supporting documentation architecture, netting agreements, collateral agreements and other risk-reduction and risk-mitigation tools.  These tools enable and provide the legal certainty for counterparties to net down their exposures to a single economic position and to further manage that position through the use of collateral.”

 Mr. Pickel added:  “ISDA is working with all constituents across the industry to realize swift and smooth resolution in closing out bilateral derivatives positions in which Lehman Brothers Holdings Inc. is either a counterparty or reference entity.  The Association expects the following procedures to apply in relation to such transactions:

 Where a market participant is facing a Lehman group entity as counterparty on an OTC derivative trade, whatever the underlying asset class (eg, interest rate swap and including credit derivatives):  Participants are expected to refer to the Master Agreements and Credit Support (collateral) documentation that they have in place covering OTC derivative transactions with one or more Lehman group entities and take advice from legal counsel as appropriate. Where participants determine that an event of default has occurred with respect to their counterparty (and, depending on the terms of their agreements, other group entities), the terms of this documentation will allow participants to take bilateral action to: i) close out contracts; ii) determine the net amount owing between them (by reference to the method applicable in their documentation, whether Close-out Amount, Market Quotation, or Loss); and iii) take into account any collateral that may have been posted. Parties are expected to determine when and how to put these provisions into practice, working with their legal counsel as appropriate.

 Where a Lehman group entity is the subject of a credit derivative trade, i.e., it is the Reference Entity:  A decision has been made to hold an auction with respect to covered credit derivatives transactions that reference LBHI. ISDA will perform its usual role in relation to such auction. This process will follow the usual timeline, involving market participants in all the stages that normally apply in effecting a protocol.

 Interested parties should continue to monitor the ISDA website at www.isda.org for ongoing announcements in relation to market developments.