Transaction - 1992 ISDA Provision
1992 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
preamble in all its glory
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Like all good stories, the ISDA starts with a 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 asked a callow young contrarian to look at an 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.
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 Associations, 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.
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), EFAMA (the European Fund and Asset Management Association, the MFA (the Managed Funds Association), (not to be confused, by the way, with the Fund Management Association of Kenya) and the IA (the Investment Association), representing their interests.
The 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.
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.
- The JC’s famous Nutshell™ summary of this clause