ISDA Agreements
International Swaps Derivatives Agreement
An ISDA is the standard Master agreement. The agreement addresses the working relationship between the parties and details various events of default and early termination events.
The schedule to the ISDA is the part of the agreement that is negotiated and the parties make elections in the schedule that then apply to the terms of the Master. Hedge funds should be particularly mindful of the cross default provisions and additional termination events which are continually being extended.
Talk to OESA about ISDA Agreements
CSA Credit Support
Credit support annex
This annex deals with the operational aspects of posting collateral from the transactions that are traded under the ISDA. It details the types of collateral, the haircuts and delivery times. Some PB's do not request a CSA if their PB agreement covers collateral and margin on an integrated basis.
Master Confirms and Bespoke annexes for the ISDA or stand alone
Due to regulatory demands Master confirmations are now used for most products that fall under an ISDA Master. These are agreed pre trade and are then used to document the individual transactions thereafter. As they are specific to each type of product they need careful review. There is also a trend towards central clearing and again these terms need to be reviewed. As some counterparties vary these standard industry terms you have to be careful if you trade with different counterparties that your transactional terms are matched and a legal arbitrage is not created unwittingly.
