Derivatives—ISDA documentation framework
Derivatives—ISDA documentation framework

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

  • Derivatives—ISDA documentation framework
  • Documentation framework
  • Master agreement
  • Schedule
  • Credit support documents
  • Confirmations
  • A single agreement

The International Swaps and Derivatives Association, Inc. (ISDA) is an association for participants in the derivatives industry. It has developed standard documentation for derivatives. The vast majority of derivative transactions are documented using ISDA standard documentation.

This Practice Note explains the key ISDA documents in a typical derivatives transaction, their framework and how they interrelate.

The key documents are:

  1. master agreement

  2. schedule

  3. credit support documents (only applicable if the parties require collateral or security to be provided), and

  4. confirmations

Documentation framework

ISDA

ISDA is a global association which represents participants in the international privately negotiated over-the-counter derivatives market. Members of ISDA include derivatives dealers, corporations, law firms, among others. Its members are all listed on the ISDA website.

ISDA has produced standardised derivatives documentation. The benefits of having standardised documents are:

  1. the time and cost involved to negotiate and agree derivative transactions has been greatly reduced, and

  2. the use of derivatives has grown

ISDA documentation

The ISDA documentation framework for derivatives involves layers of documentation (often referred to as the ISDA documentation architecture). It is important to understand how each document fits within the framework in order to be able to negotiate the documentation effectively. The key layers of documentation for a trade under the ISDA documentation framework are:

  1. master agreement—a pre-printed umbrella document which includes the boilerplate provisions (unless varied by