Negotiation Anatomy™
Master trading agreements: a spotter’s guide
Segment |
Agreement |
Publisher |
Cleared/OTC |
Asset classes |
Trade types |
Collateral? |
Netting?
|
Cash markets |
Terms of business |
Broker |
OTC |
Equities, fixed income, FX |
Cash equities Spot FX Other spot or short-dated DVP transactions |
No. |
No.
|
Derivatives |
ISDA Master Agreement Regional variations (FBF, DRV, CMOF, SMA) |
ISDA Regional industry bodies |
OTC, OTC to CCP |
All |
Swaps, forwards, options Some securities financing. |
Yes. |
Yes.
|
Exchange-traded derivatives |
FIA Professional Client Agreement |
FIA |
Cleared |
All |
Listed futures & options |
Yes. |
Yes.
|
Securities financing |
GMRA/MRA GMSLA/MLSA |
ICMA ISLA |
OTC |
Bonds Equities |
Repos Securities lending |
Yes. |
Yes.
|
Prime brokerage |
Prime brokerage agreement |
Prime broker |
OTC |
Equities, fixed income, FX |
Margin lending, Securities financing, ETD |
Yes. |
Yes: Master netting agreement.
|
Commodities |
Various commodity masters |
Industry bodies |
OTC |
Physical commodities, metals |
Spot and forward |
Yes. |
Yes.
|
Energy |
EFET Master Agreement Grid Trade Master Agreement NAESB Master Agreement |
EFET FIA NAESB |
OTC |
Power, gas, emission allowances |
Spot and forward |
Yes. |
Yes.
|
Oil/Freight |
BP/Shell T&Cs BIMCO |
BP/Shell BIMCO |
OTC |
Oil, freight |
Spot and forward |
No. |
No.
|
|
The capital markets are strewn with different master trading agreements covering different asset classes and trading arrangements. Depending on what you want to trade, and with whom, there are all kinds of different master agreements, so as a basic service — E&OE as always — we herewith, in the panel, we set them out in their basic shape and form. In the premium content section we will look a bit more closely at how they do interact, when they do not, what there is to be said for rolling up all transactions into a single single agreement, what do to about free radicals and light brown floaters, and how one should navigate this thicket of conflicting terms.
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|
See also
References