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In September 2006, leaders within the Wall Street dealer community announced plans to trade various forms of housing derivative products that will trade over-the-counter (OTC), with terms as long as 5 years. Transactions for most of these instruments (i.e., other than those governed by SEC regulations, such as index-linked notes) will be governed by International Swaps and Derivatives Association (ISDA) agreements between the counterparties, with collateral posting governed by a Collateral Security Annex (CSA). Counterparties will be able to monetize or unwind trades by entering into offsetting positions or assigning trades to a housing derivatives dealer. Possible product structures include:
› CDS-like contracts (with and without ratings) › Floors › Forwards › Index-Linked Notes › Options › Total Return Swaps (TRS) |
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