ISDA will facilitate the process by publishing the auction terms on its website, www.isda.org, in the next few weeks. The auction terms, including the auction date, will be determined by the LCDX dealers according to the LCDS Auction Rules published on ISDA's website.
The auction terms will set out a settlement mechanism similar to that used to settle recent credit events including Lehman Brothers and Washington Mutual. However unlike those credit events, the auction mechanism is already built into ISDA's standard loan-only CDS documentation, therefore no protocol is required. This is the second time the auction has been used to settle loan-only CDS contracts, the first being Movie Gallery in October 2007. The auction will be administered by Markit and Creditex.