Template:Isda scope of agreement summ

The minds of ISDA negotiators, and even more so credit officers, are beset by phantoms, bats, ticks and other unmentionables, sucking the life juices from them as they sleep, or should they for a moment drop their guards.

One particular kind of succubus is the random capital markets transaction, flitting around, unattached to the ISDA or any other master agreement, unnettable, and wildly consumptive of risk limits, balance sheet and regulatory capital.

Exactly what these transactions are, and who enters them, is difficult to say. “That,” says our fearful young credit officer, “is precisely the point.”

In this day and age, they will be very few and far between. DVP brokerage settlements. Spot and very short-dated FX trades done under terms of business. Swap trades executed under long-form confirmations — though there should be none of these if you have an ISDA. But perhaps a few still linger darkly from your cavalier days before you inked a Single Agreement.

If, in your organisation, there are transactions like that, flitting around, beating their wings angrily on your window pane and disrupting your night’s rest, then this provision is for you. It gathers up all those orphan transactions and sweeps them under the comforting matronly rug of the ISDA. They no longer need to be Specified Transactions: now they are grown-up, fully fledged Transactions intheir own right under the ISDA. Default is now a direct Event of Default under the ISDA Master Agreement: no longer must you rely on the proxy of DUST.