2002 ISDA Master Agreement

ISDA Anatomy™

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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: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • FM • Tax Event • TEUM • CEUM • ATE	5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM • ATE	5 Events of Default: FTPD • Breach • CSD • Misrep • DUSS • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM
Early Termination	6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations; Payment Date • Payments on ET • Set-off	6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET • Set-off	6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments 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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The 2002 ISDA is the current version of the ISDA Master Agreement. It succeeded the 1992 ISDA some twenty-two years ago now, though a bit like Logan Roy in Succession, the old buzzard is having trouble letting go.

As such, both agreement versions are still in use for existing and new business in the market, though — and not before time — the 1992 ISDA is dying out and is only really used by Amish and Mennonite communities, people who think geodesic domes are a neat idea and, er, Americans. But even the Americans are struggling to see the funny side.

If you want to see the funny side, you really should go see our ISDA Anatomy which breaks it down, clause by clause, and even gives you a nice and easy plain English version of each provision.^[1]

Why they introduced the 2002 ISDA Master Agreement

The 2002 ISDA was introduced, primarily, to:

Loss/MQ begone: Finally take out to the woodshed the whole Loss/Market Quotation farrago (and all that First Method and Second Method nonsense) by introducing the Close-out Amount.
Reference market makers, Settlement Amounts also begone: That meant no need for Reference Market-makers, Settlement Amounts and so on so they went too.
Force majeure: finally make an honest man out of , well, God, by adding a Force Majeure Event under Section 5(b)(ii) — hitherto parties had boshed up something custom each time.
Waiting Time for Illegality: The 2002 ISDA builds out Illegality to include the Waiting Period concept (also used in Force Majeure Event come to think of it).
Set-off: To finally end the gruesome cottage industry of half-arsed, half-witted set-off provisions that don’t really work, by providing an express, fully-arsed half-witted set-off provision that doesn’t really work (Set-off under Section 6(f)).