ISDA and FIA Cleared Derivatives Execution Agreement and Addendum
Produced in partnership with Assia Damianova of Cadwalader, Wickersham & Taft LLP
ISDA and FIA Cleared Derivatives Execution Agreement and Addendum

The following Banking & Finance practice note produced in partnership with Assia Damianova of Cadwalader, Wickersham & Taft LLP provides comprehensive and up to date legal information covering:

  • ISDA and FIA Cleared Derivatives Execution Agreement and Addendum
  • Role of the Agreement
  • Structure of the Agreement
  • Main building blocks
  • Clearing procedure
  • Alternative action where trades are not matched
  • Termination amounts
  • Other key terms of the Agreement
  • The Annex
  • The Addendum
  • More...

Clearing requirements have brought about significant changes to derivatives documentation. While uncleared derivatives continue to be governed by an International Swaps and Derivatives Association (ISDA) Master Agreement and a Credit Support Annex, cleared derivatives require further documentation such as: (i) clearing agreements, (ii) give-up agreements, and (iii) collateral transformation agreements.

The derivatives industry has created standard forms to assist with the documentation burden arising from putting clearing arrangements in place and generally to assist with complying with the new rules governing derivatives. Those standard documents include classification letters, delegated reporting agreements (both available from the ISDA website) and client clearing documentation for both US and non-US platforms, as well as a number of protocols and standard amendment agreements.

For more information on documenting clearing relationships, see Practice Note: Documenting a derivatives clearing relationship—EU platforms.

The purpose of this Practice Note is to describe the key terms of the 2017 ISDA/Futures Industry Association (FIA) Cleared Derivatives Execution Agreement (the 'Agreement') and the ISDA/FIA Client Cleared over-the-counter (OTC) Derivatives Addendum (the 'Addendum'). Both the Agreement and Addendum are available on ISDA’s website.

Role of the Agreement

The Agreement is designed as a template for market participants needing an execution agreement under English law for derivatives that are intended to be cleared by central counterparties (CCPs) located outside of the US. The Agreement works with the 'principal model' of clearing where the

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