Preamble - ISDA Provision

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2002 ISDA Master Agreement

A Jolly Contrarian owner’s manual™

Preamble in a Nutshell

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Preamble in all its glory

International Swaps and Derivatives Association, Inc.



have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this 2002 Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions. This 2002 Master Agreement and the Schedule are together referred to as this “Master Agreement”.
Accordingly, the parties agree as follows:―

Related agreements and comparisons

Click here for the text of Section Preamble in the 1992 ISDA
Click to compare this section in the 1992 ISDA and 2002 ISDA.

Resources and Navigation

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 to expand:



Like all good stories, the ISDA starts with a Preamble. Everyone, once, stares at that gnomic title and thinks, “okay, what the hell is this all about?”

Well, step this way, young padawan. Step into this rabbithole. A fellow called Gerald[1] asked a callow young contrarian to look at an aye-ess-dee-aye once, in about 1995, and — well, here we all are, folks. Honestly, if I had known how much time I was going to spend with the damn thing I would have paid a lot more attention in the first place.

A word on industry associations

ISDA, who publishes the ISDA, is the International Swaps and Derivatives Association. Those with a keen eye will note that, some time between 1992 and 2002, it rebranded from the “International Swap Dealers Associations, Inc.” — interesting plural, that, but in any case an outwardly sell-side outfit — to the more neutral-sounding “International Swaps and Derivatives Association, Inc.”: singular, at the same time more unitary and more inclusive sounding, but still in spirit the same old ISDA, stake-held predominantly by the largest broker-dealers on the face of the Earth. It may have aspirations to conquer the world but for now ISDA remains a “dealer-community” association.

As we note elsewhere, there is typically a “sell-side” broker and a “buy-side” end user to an ISDA Master Agreement.

These days the “buy-side lobby” is a lot bigger, more organised and better represented than it used to be, with AIMA (the Alternative Investment Management Association),[2] EFAMA (the European Fund and Asset Management Association,[3] the MFA (the Managed Funds Association),[4] (not to be confused, by the way, with the Fund Management Association of Kenya) and the IA (the Investment Association),[5] representing their interests.

The preamble

The preamble is just the loosener before things get properly going, and there is not a lot to see. It has not really changed a lot between the 1992 ISDA and the 2002 ISDA (nor indeed, from the 1987 ISDA, except that the Single Agreement clause got promoted from a casual remark during the warm-up, in the 1987 ISDA, to the first searching delivery of the first over.[6]



ISDA architecture

The legal documentation for an ISDA swap transaction comes in three main parts, but — of course — there are complications for the legal eagles to get their iatrogenic talons into. But for now, let’s start at the beginning.

The ISDA Master Agreement

The ISDA Master Agreement is the basic framework which applies to anyone who touches down on planet ISDA. There are three existing versions:

  • the state-of-the-art 2002 ISDA;[7]
  • the still-popular-with-traditionalists-and-Americans 1992 ISDA, and
  • the all-but-retired-but-don’t-forget-there-are-still-soldiers-in-the-Burmese-jungle 1987 ISDA[8]
  • the interesting-only-for-its-place-in-the-fossil-record-and-witty-acrostic 1985 ISDA Code; and
  • there isn’t a 2008 ISDA. That’s a little running JC in-joke.[9]

All three versions have a tri-partite form: Pre-printed Master, Schedule and — well, this is controversial: for is it, or is it not, part of the ISDA Master Agreement? — Credit Support Annex.

Premium content

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  • The JC’s famous Nutshell summary of this clause
  • ISDA architecture: Interaction between:
  • Pre-printed master
  • ISDA Schedule
  • Credit support arrangement
  • Confirmation
  • The uncharacteristic looseness in the definition of “Transaction”
  • Is the Confirmation the binding legal agreement or is it the oral conversation between the traders?

See also



  1. Hi Gerald!
  6. Cricket metaphor. To our American readers, we would say sorry, except that we are not. There will be cricket analogies throughout.
  7. There is no such thing as a 2008 ISDA. That was a joke on our part.
  8. Seriously: proceed with caution with one of these. 1987 ISDAs don’t have a lot of safety features a modern derivatives counterparty relies on, so only for real specialists and weirdos. Think of it like flying a spitfire rather than a 737 Max. Um, okay, bad metaphor.
  9. Talking to yourself might not be the first sign of madness, but having in-jokes with yourself might be.