Accounting, Legal and Infrastructure
Documentation and Law
The ISDA Master Agreement, CSAs, termination events, and close-out netting and its enforceability.
Introductory1 pagePractitioner5 pagesAdvanced1 page
1Documentation
- IntroductoryThe ISDA Master Agreement and ScheduleSigning a master agreement helps make clear that the later trades are conducted on the same terms.
- PractitionerThe Credit Support Annex (CSA)A CSA fixes in advance who delivers how much collateral, when the market value of the trades under the master agreement moves.
- PractitionerISDA ProtocolsA protocol replaces the separate amendment contract needed with each counterparty with a single adherence to an ISDA document.
2Termination and Netting
- PractitionerEvents of Default and Termination EventsThe master agreement sets out insolvency, failure to pay, and deterioration in credit standing as events that allow the trades to be ended early.
- PractitionerClose-Out NettingIn close-out netting, when the counterparty fails, the net of the values of all transactions becomes a single claim or obligation.
- PractitionerJapan's Close-Out Netting ActThe act has four articles in its main text, covering its purpose, definitions, its relation to insolvency proceedings, and the treatment of collateral in reorganization proceedings.
- AdvancedNetting Enforceability and Legal OpinionsA legal opinion states in writing that close-out netting is expected to be recognized in the relevant jurisdictions.