Isda Master Agreement 1992

The ISDA Master Agreement 1992, also known as the International Swaps and Derivatives Association Master Agreement, is a standard document in the financial industry that governs the terms of over-the-counter (OTC) derivatives transactions.

The ISDA Master Agreement 1992 was first published by the International Swaps and Derivatives Association in 1992, and it has since become one of the most widely used standard documents in the OTC derivatives market.

The purpose of the ISDA Master Agreement 1992 is to provide a standardized set of terms and conditions for OTC derivatives transactions, which can be customized to meet the specific needs of the parties involved. This standardization helps to reduce the time and cost involved in negotiating individual contracts for each transaction.

The ISDA Master Agreement 1992 covers a range of OTC derivatives transactions, including swaps, options, and forwards. It includes provisions on the payment and delivery of underlying assets, the calculation and payment of payments and fees, and the resolution of disputes between the parties.

One of the key features of the ISDA Master Agreement 1992 is the use of netting, which allows parties to offset the value of their positions with each other and settle the difference. Netting helps to reduce the credit risk associated with OTC derivatives transactions, as it ensures that only the net amount owed between the parties needs to be settled.

The ISDA Master Agreement 1992 also includes provisions on termination events, which allow either party to terminate the agreement in certain circumstances, such as default or bankruptcy of the other party.

In summary, the ISDA Master Agreement 1992 is an important standard document in the OTC derivatives market, providing a standardized set of terms and conditions for transactions. Its use helps to reduce the time and cost involved in negotiating individual contracts for each transaction, and it includes provisions on netting and termination events to reduce credit risk.