ISDA Master Agreement Definition

GLOSSARY

What does ISDA Master Agreement mean?

Standard contract for derivative transactions created by the International Swaps and derivatives Association (isda) trade association.

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ISDA documentation in a finance transaction—checklist

ISDA documentation in a finance transaction—checklist This checklist sets out the key ISDA documentary requirements which need to be considered during the course of a financing transaction. Term sheet stage • if acting for a borrower and specialist hedging advisors are instructed, get their input on the term sheet • if acting for a borrower, ensure that the overall pricing of the transaction is understood (across both the loan and the hedging). A borrower may choose a particular lender based on a low margin offered on the loan, but then find that the credit spread on the swap offered by the same lender means that the overall economics of the transaction are less attractive than those offered by a different lender • is the loan and hedging on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA)? Will the loan transition from an IBOR to a RFR during its term and, if so, how will the hedging be dealt with? • does the lender require a...

Coronavirus (COVID-19)—checklist for financial services firms

Coronavirus (COVID-19)—checklist for financial services firms This Checklist is authored by Clifford Chance lawyers from across their offices in Asia, the UK, Continental Europe and the US, and was first published by Clifford Chance on 12 March 2020. It sets out regulatory considerations as a starting point for regulated financial services firms, including impacts on financial contracts, regulatory requirements and expectations around business continuity planning and operational resilience. As the coronavirus (COVID-19) outbreak continues to spread, there has been increased focus from financial services regulators around the world on the contingency plans of regulated financial firms. Regulators will expect firms to take all reasonable steps to continue meeting their regulatory obligations and to assess their operational risks, their ability to continue operating and the steps they need to take to serve and support their customers. This briefing provides a checklist of regulatory considerations as a starting point for regulated financial services firms, including impacts on financial contracts, regulatory requirements and expectations around business continuity planning and operational resilience....

Scope of the ISDA Master Agreement—Section 6 (Early Termination)

ISDA documentsThe 1992 and 2002 ISDA Master Agreements (the Master Agreements) are standard form documents produced by the International Swaps and Derivatives Association, Inc (ISDA).In this Practice Note, references to Sections of a Master Agreement and Parts of a Schedule are references to the 2002 ISDA Master Agreement and Schedule unless otherwise stated.For general information about negotiating ISDA Master Agreements, see: Introduction to negotiating ISDA documents.Section 6—Early TerminationSection 6 (Early Termination) of the Master Agreement sets out the consequences of an occurrence of an Event of Default or Termination Event as detailed in Section 5 (see Practice Note: Scope of the ISDA Master Agreement—Section 5 (Events of Default and Termination Events)). Importantly, it sets out how the close out netting mechanism operates following an Event of Default or Termination Event.Right to Terminate Following an Event of DefaultWhere a party has defaulted under Section 5(a) (Events of Default) of the Master Agreement, under Section 6(a) (Right to Terminate Following Event of Default) of the Master Agreement the Non-defaulting Party is entitled,...

Derivatives—ISDA documentation framework

The International Swaps and Derivatives Association, Inc. (ISDA) is a trade association for participants in the derivatives industry. It has developed standard documentation for derivatives. The vast majority of over-the-counter (OTC) derivative transactions are documented using ISDA standard documentation.This Practice Note explains the key ISDA documents in a typical OTC derivatives transaction, their framework and how they interrelate.The key documents are:•master agreement•schedule•credit support document (only applicable if the parties require collateral or security to be provided), and•confirmationDocumentation frameworkISDAISDA is a global association which represents participants in the international privately negotiated OTC derivatives market. Members of ISDA include derivatives dealers, corporations, law firms, among others. Its members are listed on the ISDA website.ISDA has produced standardised derivatives documentation. The benefits of having standardised documents are:•the time and cost involved to negotiate and agree derivative transactions is greatly reduced•increases liquidity (as it is cheaper and easier for parties to engage in repeat transactions), and•standardisation of documentation is key to digitisationISDA documentationThe ISDA documentation framework for derivatives involves layers of documentation (often referred...

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Closing language for ISDA Master Agreement Early Termination Notices

Closing language for ISDA Master Agreement Early Termination Notices Closing language If you have any queries regarding this notice, please contact [insert name and role with contact details] We hereby reserve unconditionally and in full all of our rights in respect of the Agreement whether arising under contract law or otherwise, including all claims and remedies pursuant to the Agreement or under applicable law. Nothing in this notice constitutes an offer to amend, or a waiver of, any such rights. As provided in Section 9(f) of the Agreement, no failure to exercise nor any delay in exercising on our part any right, power or remedy under the Agreement or under applicable law shall

Notice designating an Early Termination Date following a Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party (2002 ISDA Master Agreement provisions)

Notice designating an Early Termination Date following a Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party (2002 ISDA Master Agreement provisions) Notice designating an Early Termination Date following a Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party [Insert Lead-in Language] We hereby notify you of the occurrence of the following circumstances: [Describe to a reasonable level of detail the circumstances giving rise to the Credit Event Upon Merger/Additional Termination Event/Tax Event Upon Merger where Burdened Party is not Affected Party and identifying the Affected Transactions. Your explanation should be sufficiently detailed and tied to the relevant wording of Section 5(b) or the Additional Termination Event language such that the counterparty could reasonably be expected to understand the reasoning for your determination.] These circumstances constitute [a Credit Event Upon Merger OR an Additional Termination Event under [insert cross-reference to provision of ISDA Schedule or Confirmation] OR a Tax Event Upon Merger in respect of...

Dive into our 17 Precedents related to ISDA Master Agreement

What is a flawed asset agreement and when should it be used?

What is a flawed asset agreement and when should it be used? This Q&A explains what a flawed asset agreement is and describes when flawed asset agreements and provisions may be used. For an explanation of how to take security over bank deposits, arrangements which often contain a flawed asset provision, see Practice Note: Taking security over cash deposits in bank accounts. Summary A flawed asset agreement provides that a cash deposit or other payment obligation is not (re)payable until certain, specified events have occurred, generally the repayment of all secured liabilities in full. The ‘asset’ (ie the deposit/payment obligation) remains on the balance sheet of the borrower and shown as an asset but is ‘flawed’ in the sense that the borrower has no right to the money comprising the deposit or payment obligation until the specified events have occurred. A flawed asset agreement is most often found in security documents that create security over cash deposits, especially the so called ‘triple cocktail’ document (see Triple cocktail...

Can I amend my 1992 ISDA Master Agreement to reflect the provisions set out in the 2002 ISDA Master Agreement?

Can I amend my 1992 ISDA Master Agreement to reflect the provisions set out in the 2002 ISDA Master Agreement? What are the differences between a 1992 ISDA Master Agreement and a 2002 ISDA Master Agreement? The 2002 ISDA Master Agreement was published to take into account market developments and changes in market practice since the 1992 ISDA Master Agreement was published. The key difference concerns how changes are calculated with the close-out amount replacing the market quotation and loss methods found in the 1992 ISDA Master Agreement. The differences between the two forms of agreement are set out in Practice Note: ISDA documentation—comparison of the 1992 and 2002 master agreements. How can I adapt a 1992 ISDA Master Agreement? ISDA published a form of amendment (the Amendment) in March 2003 to allow parties to amend various sections of the 1992 ISDA Master Agreement (multicurrency—cross border). The Amendment replaces Market Quotation and Loss with Close-out Amount, which is the new measure of damages used in the 2002 ISDA Master...

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What makes a jurisdiction clause exclusive? (Dexia v Patrimonio del Trentino)

Dispute Resolution analysis: This judgment on the Italian swaps litigation addresses a range of jurisdictional questions. It focuses on a bespoke version of the standard ISDA jurisdiction clause. While ostensibly providing for the jurisdiction of both the English and Italian courts, the court construed it as an exclusive jurisdiction clause in favour of England. The judgment also clarifies the scope of the service out gateway under CPR 6.33(2B(b), confirming that it extends to any claim (whether ‘in respect’ of a contract or not) falling within a contractual jurisdiction clause. Finally, the court dismissed Trentino’s innovative argument that the ‘unforeseeable effects’ of Brexit (notably the risk of parallel proceedings and the potential unenforceability of an English judgment in Italy) made Italy a more appropriate forum than England. Written by Harriet Campbell, senior knowledge lawyer at Penningtons Manches Cooper LLP.

Dispute Resolution weekly highlights—31 October 2024

This week's edition of Dispute Resolution weekly highlights includes the UK Supreme Court’s decision in Tindall v Thames Valley Police recognising the interference principle, as well as High Court decisions dealing with limitation in unfair prejudice claims and Norwich Pharmacal relief against a law firm; dates for your diary; details of our most recently published content; and other information of general interest to dispute resolution practitioners.

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