Template:Isda Preamble summ: Difference between revisions

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Like all good stories, the ISDA starts with a {{ {{{1}}}|Preamble}}. Everyone, once, stares at that gnomic title and thinks, “okay, what the hell is ''this'' all about?”   
Like all good stories, the ISDA starts with a {{ {{{1}}}|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<ref>[http://legalfitz.co.nz/ Hi Gerald!]</ref> asked a callow young contrarian to look at an [[eye-ess-dee-aye|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.
Well, step this way, young padawan. Step into this rabbithole.  
Personal note: in Wellington, New Zealand, a chap called {{plainlink|http://legalfitz.co.nz|Gerald}} (if you’re reading, hi, Gerald!) asked a callow young contrarian to look have a look at this odd document that seemed to be called an {{aies}} 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 to it in the first place.


====A word on industry associations====
====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 Association''s'', 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.  
ISDA, which publishes the ISDA, ''was'' the “International Swap Dealers Association''s'', Inc.” — interesting plural, that — but in any case, outwardly a ''[[sell-side]]'' industry association. Sometime between 1992 and 2002, it rebranded itself as the “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 — increasingly, it seems hell-bent on doing so, encroaching on the commodities, carbon, securities financing and crypto domains — but for now ISDA remains a “dealer-community” association, largely devoted to the swap.
 
====Buy-side and sell-side====
We will have more to say about this [[The bilaterality, or not, of the ISDA|in later essays]], but for the time being note that in most swap transactions there is a “sell-side” dealer and a “buy-side” end user to an {{isdama}}. There is a small class of “inter-dealer” swap contracts, but these generally do not create quite the same excitement as do Transactions between dealers and their customers.


As we note [[The bilaterality, or not, of the ISDA|elsewhere]], there is typically a “sell-side” broker and a “buy-side” end user to an {{isdama}}.  
====“Dealer” versus “broker”====
Swaps are inherently principal contracts, so the [[sell-side]] participant in a swap is always a “[[dealer]]”. ([[Broker]]s act as [[agent]]s to put a buyer and a seller together and charge a [[commission]]. [[Dealer]]s act as [[principal]], buying from a seller, and on-selling to a buyer, but the economic upshot of what they do in either case is the same.)


====Buy-side trade associations====
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),<ref>https://www.aima.org</ref> EFAMA (the European Fund and Asset Management Association,<ref>https://www.efama.org</ref> the MFA (the Managed Funds Association),<ref>https://www.managedfunds.org</ref> (not to be confused, by the way, with the Fund Management Association of Kenya) and the IA (the Investment Association),<ref>https://www.theia.org</ref> representing their interests.
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),<ref>https://www.aima.org</ref> EFAMA (the European Fund and Asset Management Association,<ref>https://www.efama.org</ref> the MFA (the Managed Funds Association),<ref>https://www.managedfunds.org</ref> (not to be confused, by the way, with the Fund Management Association of Kenya) and the IA (the Investment Association),<ref>https://www.theia.org</ref> representing their interests.


====The preamble====
====The preamble====
The {{ {{{1}}}|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 {{1992ma}} and the {{2002ma}} (nor indeed, from the {{1987ma}}, except that the {{isdaprov|Single Agreement}} clause got promoted from a casual remark during the warm-up, in the {{1987ma}}, to the first searching delivery of the first over.<ref>Cricket metaphor. To our American readers, we would say sorry, except that we are not. There will be cricket analogies throughout.</ref>
The {{ {{{1}}}|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 {{1992ma}} and the {{2002ma}} (nor indeed, from the {{1987ma}}, except that the {{isdaprov|Single Agreement}} clause got promoted from a casual remark during the warm-up, in the {{1987ma}}, to the first searching delivery of the first over.<ref>Cricket metaphor. To our American readers, we would say sorry, except that we are not. There will be cricket analogies throughout.</ref>

Revision as of 11:39, 14 January 2024

Like all good stories, the ISDA starts with a {{ {{{1}}}|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. Personal note: in Wellington, New Zealand, a chap called Gerald (if you’re reading, hi, Gerald!) asked a callow young contrarian to look have a look at this odd document that seemed to be called an Aïessdiyé 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 to it in the first place.

A word on industry associations

ISDA, which publishes the ISDA, was the “International Swap Dealers Associations, Inc.” — interesting plural, that — but in any case, outwardly a sell-side industry association. Sometime between 1992 and 2002, it rebranded itself as the “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 — increasingly, it seems hell-bent on doing so, encroaching on the commodities, carbon, securities financing and crypto domains — but for now ISDA remains a “dealer-community” association, largely devoted to the swap.

Buy-side and sell-side

We will have more to say about this in later essays, but for the time being note that in most swap transactions there is a “sell-side” dealer and a “buy-side” end user to an ISDA Master Agreement. There is a small class of “inter-dealer” swap contracts, but these generally do not create quite the same excitement as do Transactions between dealers and their customers.

“Dealer” versus “broker”

Swaps are inherently principal contracts, so the sell-side participant in a swap is always a “dealer”. (Brokers act as agents to put a buyer and a seller together and charge a commission. Dealers act as principal, buying from a seller, and on-selling to a buyer, but the economic upshot of what they do in either case is the same.)

Buy-side trade associations

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),[1] EFAMA (the European Fund and Asset Management Association,[2] the MFA (the Managed Funds Association),[3] (not to be confused, by the way, with the Fund Management Association of Kenya) and the IA (the Investment Association),[4] representing their interests.

The preamble

The {{ {{{1}}}|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.[5]

  1. ↑ https://www.aima.org
  2. ↑ https://www.efama.org
  3. ↑ https://www.managedfunds.org
  4. ↑ https://www.theia.org
  5. ↑ Cricket metaphor. To our American readers, we would say sorry, except that we are not. There will be cricket analogies throughout.
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