An introduction to the 2014 ISDA Credit Derivatives Definitions

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • An introduction to the 2014 ISDA Credit Derivatives Definitions
  • Why are ISDA definitional booklets needed?
  • What is the background to the 2014 ISDA Credit Derivatives Definitions?
  • What are the main changes made by the 2014 ISDA Credit Derivative Definitions?
  • Governmental intervention
  • Financial reference entities
  • Subordinated / senior credit default split
  • Asset package delivery
  • Successors
  • Standard reference obligation
  • More...

An introduction to the 2014 ISDA Credit Derivatives Definitions

Why are ISDA definitional booklets needed?

The vast majority of derivative transactions are documented by standard documentation developed and published by the International Swaps and Derivatives Association, Inc. (ISDA). The key ISDA document which sets out the commercial terms of a particular trade are set out in a confirmation. For more information, see Practice Note: ISDA confirmations. A confirmation may incorporate certain defined terms by reference to booklets published by ISDA which are known as the ISDA definitions. Various ISDA definitions booklets have been published and are to be selected for incorporation into a confirmation depending on the type of derivative transaction involved (see Practice Note: ISDA definitions).

When a party is documenting a credit derivative transaction, typically the confirmation will incorporate the 2014 ISDA Credit Derivatives Definitions (the 2014 Definitions). This is because by incorporating the 2014 Definitions, key terms found in the 2014 Definitions will automatically be applied to the transactions documented by the confirmation which leads to greater standardisation of those types of transaction.

What is the background to the 2014 ISDA Credit Derivatives Definitions?

In 1999 the first set of credit derivatives definitions were published which were followed by a new version in 2003, the 2003 ISDA Credit Derivative Definitions (the 2003 Definitions). In March 2009, ISDA published the 'big bang protocol' swiftly followed in

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