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Isda Master Agreement Essay

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ISDA MASTER AGREEMENT

Also known as an ISDA Master or simply an "ISDA." The standardized, pre-printed form agreement published by the International Swaps and Derivatives Association, Inc. (ISDA), which is used to document over-the-counter (OTC) derivatives trades. The parties add to or modify the terms of the ISDA Master through the use of a Schedule to the ISDA Master Agreement. The ISDA Master, along with the Schedule to the ISDA Master Agreement, if any, are umbrella documents that parties typically use to govern their trading relationship, often covering many transactions (each of which is evidenced by a transaction confirmation) of different types. The ISDA Master Agreement and Schedule are also often supplemented by an ISDA Credit Support Annex (CSA), which governs margin collateral posting matters relating to transactions entered into under the ISDA Master and Schedule.
Two versions of the ISDA Master Agreement are available for use: the 1992 ISDA Master and the 2002 ISDA Master. The primary difference between the two is the method used for settlement of trades upon the occurrence of an event of default or termination event: The 2002 ISDA Master uses the Close-out Amount method while the 1992 ISDA Master uses the Market Quotation/Loss method
SCHEDULE
Also known as Schedule to ISDA Master or simply ISDA Schedule or Schedule. A document which parties to a derivatives transaction typically use to alter the terms of, or add terms to, the pre-printed standard form ISDA Master Agreement. The ISDA Schedule is incorporated into, supplements and forms a part of the ISDA Master Agreement.
CONFIRMATION
Also known as a trade confirmation, or simply, a confirmation. A document which parties to a swap or other derivatives transaction use to specify the commercial terms of the transaction, including pricing terms such as the transaction's spread. A confirmation also typically lists the notional amount of the transaction and the reference entity, if any. A credit...

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