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{{drop|A| preamble is}} he [[legal eagle]]’s opportunity to set a scene, a juridical version of “[[once upon a time]]”: an integrated passage that may or may not start with “[[whereas]]”, “[[background]]” or something like that and is meant to prime you for the meat of [[contract]]. | {{drop|A| preamble is}} he [[legal eagle]]’s opportunity to set a scene, a juridical version of “[[once upon a time]]”: an integrated passage that may or may not start with “[[whereas]]”, “[[background]]” or something like that and is meant to prime you for the meat of [[contract]]. | ||
The {{isdama}} | The {{isdama}} needs just such a scene-setter: everyone, once, stares at that gnomic title and thinks, “okay, what on earth is ''this''<nowiki> all about?” That is the {{</nowiki>{{{1}}}<nowiki>|Preamble}}. There is not much to see but, casually, it calls the reader’s attention to things that will later become important — the proverbial rifle hanging above the fireplace that goes off in the third act. That is where the similarities with Chekhov end, though: before long, it will go full Dostoyevsky on us.</nowiki> | ||
The | The {{isdama}} is the basic framework that applies to anyone who touches down on planet [[ISDA]]. The preamble tells us about its tri-partite form: the '''Pre-printed Master''', a '''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Schedule}}</nowiki>''' of elections and amendments, and '''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Confirmation}}s</nowiki>''' setting out the terms of '''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Transaction}}s</nowiki>'''. | ||
====ISDAs, Ancient and Modern==== | |||
{{drop|T|here are two}} versions of the ISDA still widely in use — the [[2002 ISDA Master Agreement]] and the [[1992 ISDA Master Agreement|ISDA Master Agreement (Multicurrency — Cross Border)]] which is known to all who love her as the [[1992 ISDA Master Agreement]]. These we call the “[[Modern ISDAs]]”. | |||
There are two more or less fully retired versions: the [[1987 ISDA Interest Rate and Currency Exchange Agreement|ISDA Interest Rate and Currency Exchange Agreement]] of 1987 (the [[1987 ISDA Interest Rate and Currency Exchange Agreement|1987 ISDA]]) and the [[1985 ISDA Code of Standard Wording, Assumptions and Provisions for Swaps|ISDA Code of Standard Wording, Assumptions and Provisions for Swaps]] of 1985 (let’s call this the [[1985 ISDA Code of Standard Wording, Assumptions and Provisions for Swaps|1985 Code]], though few people have ever even seen one). These we call the “[[Ancient ISDAs]]”. | |||
There is one, the [[2008 ISDA Master Agreement|2008 ISDA Decentralised Automomous Organisation-as-an-Agreement]] that died tragically during conception and never made it to the market but yet exists as an apocryphal testament to the enduring, wishful optimism of derivatives lawyers the world over.<ref>No, there is no such thing as a {{2008ma}}.</ref> We call this the “[[The Atlantis Variation|Atlantis Variation]]”. | |||
====={{2002ma}}===== | ====={{2002ma}}===== | ||
The still, after all these years, state-of-the-art {{2002ma}}. This is the most popular version — it took industry participants an ''awfully'' long time to get comfortable with it, despite its innovations being largely sensible but, twenty-two years into its life, most of the European and Asian markets trade on the {{2002ma}}, and we sense even those camelesque Americans are coming to begrudging terms with it. If you are ever not sure, on this wiki, the JC will generally have the {{2002ma}} in mind, though there is a fully scoped user manual and comparative discussions relating to the {{1992ma}} as well. Speaking of which — | The still, after all these years, state-of-the-art {{2002ma}}. This is the most popular version — it took industry participants an ''awfully'' long time to get comfortable with it, despite its innovations being largely sensible but, twenty-two years into its life, most of the European and Asian markets trade on the {{2002ma}}, and we sense even those camelesque Americans are coming to begrudging terms with it. If you are ever not sure, on this wiki, the JC will generally have the {{2002ma}} in mind, though there is a fully scoped user manual and comparative discussions relating to the {{1992ma}} as well. Speaking of which — | ||
====={{1992ma}}===== | ====={{1992ma}}===== | ||
The {{1992ma}} was the first global, pan-transactional, earth-shaking version of the ISDA Master Agreement. It was the first one to be actually called a “Master Agreement”. It is still popular with traditionalists, those who can’t abide a one-day grace period for {{{{{1}}}|Failure to Pay or Deliver}}, and Americans. | The {{1992ma}}<nowiki> was the first global, pan-transactional, earth-shaking version of the ISDA Master Agreement. It was the first one to be actually called a “Master Agreement”. It is still popular with traditionalists, those who can’t abide a one-day grace period for {{</nowiki>{{{1}}}<nowiki>|Failure to Pay or Deliver}}, and Americans. </nowiki> | ||
Until quite recently much of the American market was still on the {{1992ma}}, although most users heavily modified it to take in most of the innovations of the {{2002ma}}. But the anecdotal sense we have is that even in New York, these days, the {{2002ma}} is the master agreement of choice for the discerning ninja. | Until quite recently much of the American market was still on the {{1992ma}}, although most users heavily modified it to take in most of the innovations of the {{2002ma}}. But the anecdotal sense we have is that even in New York, these days, the {{2002ma}} is the master agreement of choice for the discerning ninja. | ||
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====Schedule==== | ====Schedule==== | ||
All usable versions of the {{isdama}} have a {{{{{1}}}|Schedule}} with a semi-rigid structure: | All usable versions of the {{isdama}}<nowiki> have a {{</nowiki>{{{1}}}<nowiki>|Schedule}} with a semi-rigid structure:</nowiki> | ||
{{{{{1}}}|Part 1}}: '''{{{{{1}}}|Termination Provisions}}''' <br> | <nowiki>{{</nowiki>{{{1}}}<nowiki>|Part 1}}: </nowiki>'''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Termination Provisions}}</nowiki>''' <br> | ||
{{{{{1}}}|Part 2}}: '''{{{{{1}}}|Tax Representations}}''' <br> | <nowiki>{{</nowiki>{{{1}}}<nowiki>|Part 2}}: </nowiki>'''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Tax Representations}}</nowiki>''' <br> | ||
{{{{{1}}}|Part 3}}: '''{{{{{1}}}|Documents for Delivery}}''' <br> | <nowiki>{{</nowiki>{{{1}}}<nowiki>|Part 3}}: </nowiki>'''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Documents for Delivery}}</nowiki>''' <br> | ||
{{{{{1}}}|Part 4}}: '''{{{{{1}}}|Miscellaneous (Schedule)}}''' <br> | <nowiki>{{</nowiki>{{{1}}}<nowiki>|Part 4}}: </nowiki>'''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Miscellaneous (Schedule)}}</nowiki>''' <br> | ||
{{{{{1}}}|Part 5}}: '''{{{{{1}}}|Other Provisions}}''' <br> | <nowiki>{{</nowiki>{{{1}}}<nowiki>|Part 5}}: </nowiki>'''<nowiki>{{</nowiki>{{{1}}}<nowiki>|Other Provisions}}</nowiki>''' <br> | ||
The first four parts of the {{{{{1}}}|Schedule}} fine-tune various {{{{{1}}}|Events of Default}} and {{{{{1}}}|Termination Events}} (setting {{{{{1}}}|Cross Default}} thresholds, {{{{{1}}}|Specified Entities}} and so on) allow certain elections and representations, agreeing what tax and financial disclosure each party should make and to whom, and specifying names, addresses, contact details, agents, friends and relations and so on. Part 5 is a free-form “any other business” where your credit team can indulge its fantasies, gild the lily and you can set out agreed amendments to the pre-printed form. | <nowiki>The first four parts of the {{</nowiki>{{{1}}}<nowiki>|Schedule}} fine-tune various {{</nowiki>{{{1}}}<nowiki>|Events of Default}} and {{</nowiki>{{{1}}}<nowiki>|Termination Events}} (setting {{</nowiki>{{{1}}}<nowiki>|Cross Default}} thresholds, {{</nowiki>{{{1}}}<nowiki>|Specified Entities}} and so on) allow certain elections and representations, agreeing what tax and financial disclosure each party should make and to whom, and specifying names, addresses, contact details, agents, friends and relations and so on. Part 5 is a free-form “any other business” where your credit team can indulge its fantasies, gild the lily and you can set out agreed amendments to the pre-printed form. </nowiki> | ||
A quick word on etiquette: one would ''never'' inline amend an ISDA Master Agreement — mostly they pass around the market in .pdf form, so you couldn’t anyway, but even if you could it would be unspeakably bad form to try — if you do want to make amendments to the legal or economic terms you put them in the Schedule. There are prudent [[legal design]] reasons for this, though over the years the amount of freestyle “Part 5” amendment has grown to the point where the Schedule is often longer than the Master Agreement proper. Much of this is quite unnecessary and, for lovers of clarity and documentary elegance, a cause for great regret. | A quick word on etiquette: one would ''never'' inline amend an ISDA Master Agreement — mostly they pass around the market in .pdf form, so you couldn’t anyway, but even if you could it would be unspeakably bad form to try — if you do want to make amendments to the legal or economic terms you put them in the Schedule. There are prudent [[legal design]] reasons for this, though over the years the amount of freestyle “Part 5” amendment has grown to the point where the Schedule is often longer than the Master Agreement proper. Much of this is quite unnecessary and, for lovers of clarity and documentary elegance, a cause for great regret. | ||
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The {{plainlink|https://www.managedfunds.org|MFA|}} (the Managed Funds Association) and<br> | The {{plainlink|https://www.managedfunds.org|MFA|}} (the Managed Funds Association) and<br> | ||
The {{plainlink|https://www.theia.org|AI||}} (the Investment Association). | The {{plainlink|https://www.theia.org|AI||}} (the Investment Association). | ||
<references /> | |||