Potential Events of Default under an ISDA Master Agreement and cure periods—summary and comparison table
Potential Events of Default under an ISDA Master Agreement and cure periods—summary and comparison table

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

  • Potential Events of Default under an ISDA Master Agreement and cure periods—summary and comparison table
  • Failure to pay
  • Breach of agreement
  • Credit support default
  • Default under specified transactions
  • Cross-default
  • Bankruptcy
  • Table comparing Potential Events of Default under the 1992 ISDA Master Agreement and their relevant cure periods
  • Table comparing potential events of default under the 2002 ISDA master agreement and their relevant cure periods

Under an ISDA Master Agreement, if an Event of Default (as set out in Section 5(a) of the ISDA Master Agreement) occurs, often the Defaulting Party is given a period of time in which to 'cure' the default. This means that until that cure period has ended, the derivative transaction cannot be terminated early on the grounds of an Event of Default. The different Events of Default have differing cure periods which are set out below. In general, the cure periods are shorter under the 2002 ISDA Master Agreement. The reason for this is that the ISDA working group was concerned that in periods of market uncertainty, the cure periods under the 1992 ISDA Master Agreement were too long and would add to market uncertainty and stress.

Each of the Events of Default and their relevant cure periods are set out below.

Failure to pay

  1. The Non-defaulting Party must serve notice on the Defaulting Party

  2. Under the 1992 ISDA Master Agreement, the Defaulting Party has three local Business Days to remedy this Potential Event of Default, and

  3. Under the 2002 ISDA Master Agreement, the Defaulting Party has one local Business Day to remedy this Potential Event of Default

Breach of agreement

  1. The Non-defaulting Party must serv