The ISDA Master Agreement

The Jolly Contrarian holds forth™

Resources and Navigation

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
Index: Click to expand:

A fundamental principle of derivatives trading is that, by entering a Transaction, you forever change your exposure to the risk it represents. You go from off-risk to on-risk, or vice versa. How to value that risk between times may be hard to know until it finally crystallises, under its terms, into a “settlement obligation” — whereupon you must make or receive delivery or payment of some kind.

By nature, financial risks fluctuate in unpredictable and maddening ways. But while the value of your risk position, once traded, may change, the fact that you have the risk position does not.

This might seem trite, but it is often misunderstood, especially when further down the line, something prevents settlement.

A derivative position seems a rather nebulous thing in the abstract. Before it expires, it does not feel as if the world has changed. In the same way, until the roulette ball has settled its slot, it feels as if a bet placed upon it should be cancellable: this is all very hypothetical, no-one has changed their position in reliance on a still-spinning wheel, yet, so why should a punter not be allowed to back out of the wager, and keep her stake?

This is not how casinos see it, of course. Nor do swaps dealers.

This is quite

See also

Template:M sa isda replacement cost

References