No Agency - ISDA Provision: Difference between revisions

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{{isdaanat|3(g)}}
{{isdaanat|3(g)}}
You might like our articles about principal and agents, undisclosed agents, undisclosed principals and all that good stuff.
In practice, many {{isdama}}s are entered by agents - investment managers and asset managers - on behalf of multiple underlying principals. [[Asset manager]]s often enter transactions in aggregate and only allocate them to underlying principals later in the day. This means that the broker will have a nervous few hours before it knows whom it is allowed to sue, though general principles (geddit??) of [[agency]] — in particular liability for an [[undisclosed principal]] —mean the [[agent]] is not quite so footloose and fancy-free as many seem to believe.
In a nutshell it is not the end of the world if your counterpart refuses to renounce all agency, as long as you set up the accounts correctly with the underlying principals, and the firm has a robust approach to trade allocation.

Revision as of 13:41, 3 April 2018

ISDA Anatomy™


In a Nutshell Section 3(g):

3(g) No Agency. It is a principal and not an agent under this Agreement.
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2002 ISDA full text of Section 3(g):

3(g) No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity.
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Click here for the text of Section 3(g) in the 1992 ISDA

Index: Click to expand:Navigation
See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA.
The Varieties of ISDA Experience
Subject 2002 (wikitext) 1992 (wikitext) 1987 (wikitext)
Preamble Pre Pre Pre
Interpretation 1 1 1
Obligns/Payment 2 2 2
Representations 3 3 3
Agreements 4 4 4
EODs & Term Events 5 Events of Default: FTPDBreachCSDMisrepDUSTCross DefaultBankruptcyMWA Termination Events: IllegalityFMTax EventTEUMCEUMATE 5 Events of Default: FTPDBreachCSDMisrepDUSTCross DefaultBankruptcyMWA Termination Events: IllegalityTax EventTEUMCEUMATE 5 Events of Default: FTPDBreachCSDMisrepDUSSCross DefaultBankruptcyMWA Termination Events: IllegalityTax EventTEUMCEUM
Early Termination 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculations; Payment DatePayments on ETSet-off 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculationsPayments on ETSet-off 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculationsPayments on ET
Transfer 7 7 7
Contractual Currency 8 8 8
Miscellaneous 9 9 9
Offices; Multibranch Parties 10 10 10
Expenses 11 11 11
Notices 12 12 12
Governing Law 13 13 13
Definitions 14 14 14
Schedule Schedule Schedule Schedule
Termination Provisions Part 1 Part 1 Part 1
Tax Representations Part 2 Part 2 Part 2
Documents for Delivery Part 3 Part 3 Part 3
Miscellaneous Part 4 Part 4 Part 4
Other Provisions Part 5 Part 5 Part 5
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You might like our articles about principal and agents, undisclosed agents, undisclosed principals and all that good stuff. In practice, many ISDA Master Agreements are entered by agents - investment managers and asset managers - on behalf of multiple underlying principals. Asset managers often enter transactions in aggregate and only allocate them to underlying principals later in the day. This means that the broker will have a nervous few hours before it knows whom it is allowed to sue, though general principles (geddit??) of agency — in particular liability for an undisclosed principal —mean the agent is not quite so footloose and fancy-free as many seem to believe.

In a nutshell it is not the end of the world if your counterpart refuses to renounce all agency, as long as you set up the accounts correctly with the underlying principals, and the firm has a robust approach to trade allocation.