No Agency - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ 3(g) 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. 3(g) in all its glory 3(g) No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity. edit Related agreements and comparisons Click here for the text of Section 3(g) in the 1992 ISDA There isn’t an equivalent to Section 3(g) in the 1992 ISDA but parties used to routinely crowbar one in as an additional representation under a new Section 3(a)(vi). In a spooky piece of anticipation (and since latter-day 2002 refuseniks just copy paste the 2002 clause into their 1992 ISDA), they’re the same, as this comparison will demonstrate. Resources and Navigation This provision in the 1992 Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) | 3 • (a) (b) (c) (d) (e) (f) (g) | 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) Force Majeure Event 5(b)(iii) Tax Event 5(b)(iv) Tax Event Upon Merger 5(b)(v) Credit Event Upon Merger 5(b)(vi) Additional Termination Event (c) (d) (e) | 6 • (a) (b) (c) (d) (e) (f) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) (h) | 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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Section 3(g) is the spiritual successor to Section 3(a)(vi), the added representation that parties habitually tack on to the end of Section 3(a). ISDA’s crack drafting squad™ kind of made an honest clause out of it in the 2002 ISDA.

Summary

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If you like a bit of agency chat, you might like our articles about principals and agents, undisclosed agents, undisclosed principals and all that good stuff.

Investment managers as agents

In practice, many ISDA Master Agreements are entered by agents — investment managers and asset managers (so-called “real money” managers) — on behalf of underlying principals — investment funds, and institutional clients who have appointed them as discretionary investment advisers.

These managers often enter transactions in aggregate and only allocate them to their underlying principals later in the day. This means that the broker will have a nervous few hours before it knows whom it is expected to sue if the principal doesn’t pony up on time. General principles of agency — in particular liability for an undisclosed principal —mean agents are not quite so footloose and fancy-free as many of them seem to believe.

Look, 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. Ultimately — and notwithstanding the nervous few hours pending allocation — the person against whom you are, long term, booking the trade is the principal.

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• The JC’s famous Nutshell™ summary of this clause
• The Internal agency model where one affiliate acts, internally, for another

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See also

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• Undisclosed principal
• Undisclosed agent
• Agent lender
• Agent as client