Specified Entity - ISDA Provision

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2002 ISDA Master Agreement
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Section Specified Entity in a Nutshell

Use at your own risk, campers!
Specified Entity” is defined in the Schedule.

Full text of Section Specified Entity

Specified Entity” has the meaning specified in the Schedule.

Related agreements and comparisons

Related Agreements
Click here for the text of Section Specified Entity in the 1992 ISDA
Template:Isdadiff Specified Entity

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Same concept in both versions of the ISDA Master Agreement only with different clause numberings. Specified Entity is relevant to:

And of course the Absence of Litigation representation. Let’s not forget that.



Specified Entity is so (~ cough ~) important that it is literally the first thing you see when you regard an ISDA Schedule.

Painstakingly set out, separately for Events of Default (namely DUST (Section 5(a)(v)), Cross Default (Section 5(a)(vi)) and Bankruptcy (Section 5(a)(vii)) and the one Termination Event (Credit Event Upon Merger (Section 5(b)(v) — as if you would want different Affiliates to trigger this event depending on precisely how they cork-screwed into the side of a hill), and jointly for the “Absence of Litigation” representation in Section 3(c) of the 2002 ISDA.

A Specified Entity is any affiliate (or, in theory at any rate, even a non-affiliate, if your risk officer is a total cretin) of a counterparty to an ISDA Master Agreement which is designated in the relevant Schedule.

It is relevant to the definition of Cross Default and Default under Specified Transaction in that it widens the effect of those provisions to include defaults by the parties specified.

Nominating Specified Entities for yourself under DUST has its upsides

For the most part, allowing any of your friends or relations to be named as your Specified Entity widens the range of vicissitudes of which you may fall foul, and therefore inures solely for the benefit of your counterparty. In otherwords, if you can get away with it, don’t agree to name any of your affiliates as Specified Entities.

There is one exception, and that is Section 5(a)(v) Default Under Specified Transaction).

of those provisions also to include defaults by the other side (and its Specified Entities) under their contracts with your Specified Entities — so there is some benefit to naming your affiliates, friends and relations as Specified Entities. But given how unlikely you are to be actually monitoring how a counterparty performs with an affiliate, it’s more of a false comfort than a real one.


See also