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Q&A: Ann Battle on the ISDA Master Agreement

  • By Staff Writers
  • Published: 1/14/2019


Recently, on AFP Collaborate, one of AFP’s members asked some questions on the International Swaps and Derivatives Association (ISDA) Master Agreement, which was last updated in 2002. Ann Battle, Assistant General Counsel of ISDA and a speaker at AFP 2018, took the time to share her thoughts.

Which is the relevant ISDA version as of now, is it ISDA 2002? Is the ISDA 1992 relevant anymore? This is only from a new agreement with a new counterparty perspective. 

Ann Battle: It is certainly still possible to enter a new 1992 ISDA Master Agreement with a new counterparty but we do not think this is common. And there are definitely outstanding 1992 ISDA Master Agreements.

In the ISDA 2002, the types of derivative transactions are covered under the Definitions section, “Specified Transaction” (clause 14). Where do you control which kind of derivative transactions you enter with a specific counterparty? Is it in the Schedule to the Master Agreement, or is it done through some internal derivatives/forex policy of the firm? What is the common practice followed? 

The defined term “Specified Transaction” in the Schedule to the 1992 and 2002 ISDA Master Agreements relates to cross-defaults and does not relate to what transactions are actually under the relevant master agreement. Counterparties could bilaterally negotiate contractual limitations on the types of transactions that they enter but typically they would not do so. The details of specific transactions are set forth in the “Confirmations” for the relevant transactions and, likely, dictated by internal policies of the counterparties. 

Is there any specific governing jurisdiction for ISDA agreements, or is the governing jurisdiction specific to the transaction (e.g. trade finance, offshore borrowing, etc.) and not linked to ISDA? 

In the Schedule to the 1992 and 2002 ISDA Master Agreements, counterparties select NY Law or English Law. As a technical matter, they could elect a different governing law but that would be very rare.

Under ISDA 2002, does the option of “Multiple Transaction Payment Netting” refer to bilateral transaction between the two ISDA counterparties or does this refer to multiple transactions at the group level, e.g., firm, subsidiaries, parent, guarantor, etc.? 

This refers to multiple transactions between the counterparties under the applicable ISDA Master Agreement.

Battle was a featured speaker at AFP 2018 on the upcoming Libor transition. In a video interview, she shared her thoughts on whether this benchmark rate will truly become obsolete in 2022. 

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