2002 ISDA Equity Derivatives Definitions
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Original text
Section 1.1. Transaction. “Transaction” means an Option Transaction, a Forward Transaction, an Equity Swap Transaction or any other transaction in relation to which the related Confirmation incorporates these Definitions.
Section 1.2. Option Transaction. “Option Transaction” means a transaction that is (a) an over-the-counter (“OTC”) equity option transaction relating to a single index (an “Index Option Transaction”), (b) an OTC equity option transaction relating to a single share or other security (a “Share Option Transaction”), (c) an OTC equity option transaction relating to a basket of indices (an “Index Basket Option Transaction”) or (d) an OTC equity option transaction relating to a basket of shares or other securities (a “Share Basket Option Transaction”).
Section 1.3. Forward Transaction. “Forward Transaction” means a transaction that is (a) an OTC equity forward transaction relating to a single index (an “Index Forward Transaction”), (b) an OTC equity forward transaction relating to a single share or other security (a “Share Forward Transaction”), (c) an OTC equity forward transaction relating to a basket of indices (an “Index Basket Forward Transaction”) or (d) an OTC equity forward transaction relating to a basket of shares or other securities (a “Share Basket Forward Transaction”).
Section 1.4. Equity Swap Transaction. “Equity Swap Transaction” means a transaction that is (a) an OTC equity swap transaction relating to a single index (an “Index Swap Transaction”), (b) an OTC equity swap transaction relating to a single share or other security (a “Share Swap Transaction”), (c) an OTC equity swap transaction relating to a basket of indices (an “Index Basket Swap Transaction”) or (d) an OTC equity swap transaction relating to a basket of shares or other securities (a “Share Basket Swap Transaction”).
Section 1.5. Index Transaction. “Index Transaction” means an Index Option Transaction, Index Forward Transaction or Index Swap Transaction.
Section 1.6. Share Transaction. “Share Transaction” means a Share Option Transaction, Share Forward Transaction or Share Swap Transaction.
Section 1.7. Index Basket Transaction. “Index Basket Transaction” means an Index Basket Option Transaction, Index Basket Forward Transaction or Index Basket Swap Transaction.
Section 1.8. Share Basket Transaction. “Share Basket Transaction” means a Share Basket Option Transaction, Share Basket Forward Transaction or Share Basket Swap Transaction.
Section 1.9. Basket Option Transaction. “Basket Option Transaction” means an Index Basket Option Transaction or Share Basket Option Transaction.
Section 1.10. Basket Forward Transaction. “Basket Forward Transaction” means an Index Basket Forward Transaction or Share Basket Forward Transaction.
Section 1.11. Basket Swap Transaction. “Basket Swap Transaction” means an Index Basket Swap Transaction or Share Basket Swap Transaction.
Section 1.12. Confirmation. “Confirmation” means, in respect of a Transaction, one or more documents and other confirming evidence exchanged between the parties or otherwise effective, which when taken together confirm or evidence all of the terms of a Transaction.
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Resources and Navigation
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Comparisons
A JC-curated sub-division of the General Definitions section. We sub-group the Section 1 definitions into the following subgroups:
Basics
The basic nuts and bolts of an equity derivative: the Equity Derivatives Definitions handles the “equity” side of the Transaction; the 2006 ISDA Definitions (or the 2021 ISDA Interest Rate Derivatives Definitions if you’re an early-adopter type) handles the “floating” side, which is what the customer pays to its swap dealer for its exposure: basically, the financing rate.
Financing rate ... you mean like, loan?
Sure. An equity swap bears the same relation to a margin loan as does a Pringle to a crisp.
So do not let anyone tell you that an equity derivative is not a financing tool. It is.
Transaction types
This is the Transactions section: the first eleven paragraphs of the Equity Derivatives Definitions — twelve, if you include the Confirmations definition which doesn’t really belong anywhere else —set out all the types of Transaction you can have. These break down into:
And can be on a single Index or Share or a Basket of Indices or Shares. All are documented under Confirmations, though with the onset of Master Confirmation Agreements, synthetic prime brokerage and so on, these are no longer the old-fashioned epistles they once were.
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See also
References