1987 ISDA Interest Rate and Currency Exchange Agreement

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ISDA Anatomy

incorporating our exclusive ISDA in a Nutshell™

An unloaded 87 ISDA

Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project
Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14
Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Force Majeure Event5(b)(iii) Tax Event5(b)(iv) Tax Event Upon Merger5(b)(v) Credit Event Upon Merger5(b)(vi) Additional Termination Event

Index — Click ᐅ to expand:

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Well-and-truly out-of-date version of the ISDA Master Agreement, replaced first by the 1992 ISDA and then the 2002 ISDA, the 1987 ISDA is nonetheless useful for forensic archaeologists interested to know how the state-of-the-art version got to be how it is today.[1]

And it is quite the yarn: you don’t get as shot-up and crazed as an ISDA Master Agreement without some scrapes and shootouts along the way.

Nineteen eighty-seven was a different world; the very first swap transaction[2] was only consummated in 1981. The swap master agreement was a nascent idea to streamline the documentation between counterparties, and to capture this nascent idea of close-out netting, but was basically predicated on the legal precepts of banking facilities. An ISDA Master Agreement is not, of course, any kind of banking facility: certainly not if it is daily-margined, as is now required by regulation for most of the 600 trillion of swaps transacted annually.

Many of the lending-derived credit concepts in the ISDA Master Agreement are practically redundant, but they hang on — artifacts of the great dogma of precedent.[3] If it is in the agreement, it must be there for a reason, and if I cannot conceive of one that must be down to my own mental frailty, rather than the caution or basic fussiness of our forefathers and foremothers.

So if you find something odd, check the fossil record to see if it has been there from the outset. If it has — for example, the 20-day limit on close out notices under Section 6(a) — then there’s a fair chance the market developments of the last 32 years might have rendered it pointless.

Differences between 1987 ISDA and 1992 ISDA

The 1992 ISDA was introduced principally, to:

there are some others - a helpful guide can be found here

See also


  1. There are the odd fossils who still insist on using it, though most of those have long-since been taken out and shot, a process now happening to disciples of the 1992 ISDA.
  2. Between IBM and the World Bank — see swap history for more.
  3. Did I say “dogma”? I meant doctrine!