Transaction - 1992 ISDA Provision
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1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™ preamble in all its glory
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Overview
The Preamble to the 1987 ISDA had an extra feature: the single agreement provision. By 1992, this had been moved to its own little subclause in Section 1(c), and there it has stayed ever since.
As for the modern ISDAs, there is little material difference between the 1992 ISDA and the 2002 ISDA here. By 2002, ISDA’s crack drafting squad™ was a more world-weary, battle-hardened unit than it was in 1992, and was more alive to the idea that one might document Transactions other than via a full-blown Confirmation. Particularly in the equity derivatives world, because the asset class tends to be fairly vanilla, the market was starting to generate Master Confirmation Agreements for certain markets and regions, meaning that commoditised swap transactions could be fully automated and electronically completed through online trade matching systems without any faxed bits of paper saying “Dear Ladies and Gentlemen” and similarly genteel things that are so archaic as to seem, in these snow-flecked days, mildly offensive.
Summary
The preamble, which talks in somewhat laboured terms about the architecture of the ISDA contract, is the only place in the ISDA Master Agreement where the concept of the “Transaction” — being the actual swaps you put on under one of these confounded agreements — is defined.
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- The JC’s famous Nutshell™ summary of this clause