ISDA Master Agreement
incorporating our exclusive ISDA in a Nutshell™
- What is a swap, how does it work? – founding concepts:
- “synthetic exposure”
- Mark-to-market value
- Replacement cost
- the state-of-the-art 2002 ISDA;
- 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
- 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.
Big drafting issues
- Valuation and Calculation: of transactions – differing standards between asset classes
- Close out:
- The importance of close-out netting
- Netting opinions
- Counterparty types
- Automatic Early Termination
- Multibranch parties
How the CSA works
- Title transfer versus pledge
- “Equivalent” credit support
- Independent Amounts
- Changes wrought by regulations for variation margin
- Valuation of collateral and exposure values
Notices and communications
Who are the stakeholders?
- There is no such thing as a 2008 ISDA. That was a joke on our part.
- 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.
- Talking to yourself might not be the first sign of madness, but having in-jokes with yourself might be.