The ISDA 2015 Universal Resolution Stay Protocol addresses a major impediment to the resolvability of global financial institutions. By ensuring that counterparties to an entity in resolution are on equal footing with respect to the exercise of default rights, regardless of the governing law of their agreements with that entity, the Universal Stay Protocol is a critical part of efforts to end ‘too big to fail’.
New moratoria powers under the Bank Recovery and Resolution Directive proposed by the European Commission could trigger opt-out rights for entities that have adhered to the ISDA 2015 Universal Resolution Stay Protocol. This paper considers the implications for European Union financial institutions.