Transaction - 1992 ISDA Provision

1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™ preamble in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. preamble in all its glory (Multicurrency — Cross Border) ISDA ® International Swap Dealers Associations, Inc. Master Agreement dated as of ...................................... ...................................... and ...................................... (“Party A”) (“Party B”) have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows: — edit Related agreements and comparisons Related Agreements Click here for the text of Section preamble in the 2002 ISDA Comparisons Template:Isdadiff preamble Resources and Navigation Resources Wikitext | Nutshell wikitext | 2002 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) (e) | 3 • (a) (b) (c) (d) (e) (f) | 4 • (a) (b) (c) (d) (e) | 5 • 5(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Tax Event 5(b)(iii) Tax Event Upon Merger 5(b)(iv) Credit Event Upon Merger 5(b)(v) Additional Termination Event (c) | 6 • (a) (b) (c) (d) (e) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 | Index: Click ᐅ to expand: 2002 ISDA 1992 ISDA Premium version of this page

Overview

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Redlines

• 1987 ⇒ 1992: Redline of the ’92 vs. the ’87: comparison (and in reverse)
• 1992 ⇒ 2002: Redline of the ’02 vs. the ’92: comparison (and in reverse)
• 1987 ⇒ 2002: Redline of the ’92 vs. the ’87: comparison (and in reverse)

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Discussion

The Preamble to the 1987 ISDA had an extra feature: the single agreement provision. By 1992, this had been moved to its own little subclause in Section 1(c), and there it has stayed ever since.

As for the modern ISDAs, there is little material difference between the 1992 ISDA and the 2002 ISDA here. By 2002, ISDA’s crack drafting squad™ was a more world-weary, battle-hardened unit than it was in 1992, and was more alive to the idea that one might document Transactions other than via a full-blown Confirmation. Particularly in the equity derivatives world, because the asset class tends to be fairly vanilla, the market was starting to generate Master Confirmation Agreements for certain markets and regions, meaning that commoditised swap transactions could be fully automated and electronically completed through online trade matching systems without any faxed bits of paper saying “Dear Ladies and Gentlemen” and similarly genteel things that are so archaic as to seem, in these snow-flecked days, mildly offensive.

Summary

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The preamble, which talks in somewhat laboured terms about the architecture of the ISDA contract, is the only place in the ISDA Master Agreement where the concept of the “Transaction” — being the actual swaps you put on under one of these confounded agreements — is defined.

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• The JC’s famous Nutshell™ summary of this clause

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See also

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