Derivatives documentation - Revision history

imported>Jeeten.patel@thinkpublishing.co.uk at 09:26, 19 October 2015

2015-10-19T09:26:27Z

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	ISDA updates these sets of definitions from time to time to include new types of transactions and to reflect current market practice. For example, a May 2003 Supplement, a 2005 Matrix Supplement, a 2005 Monoline Supplement and a July 2009 Supplement to the 2003 ISDA Credit Derivatives Definitions are available and the 2011 ISDA Equity Derivatives Definitions revise, expand and restructure the earlier 2002 ISDA Equity Derivatives Definitions (although at this stage, most participants continue to use the 2002 definitions). These definitions may be expressly incorporated into an ISDA master agreement or a trade confirmation (more usually the latter); they are of particular use in drafting confirmations for the various types of products traded, and for providing agreed terms and fallbacks for unexpected events. To assist market participants, ISDA has also published User‘s Guides to its master agreements and to some sets of definitions. It is, however, fair to say that the documents comprise a formidable body for the uninitiated, notwithstanding the guides, which are not intended as a substitute for taking legal advice.		ISDA updates these sets of definitions from time to time to include new types of transactions and to reflect current market practice. For example, a May 2003 Supplement, a 2005 Matrix Supplement, a 2005 Monoline Supplement and a July 2009 Supplement to the 2003 ISDA Credit Derivatives Definitions are available as well as the IDSA 2014 Credit Derivatives Definitions (discussed below) and the 2011 ISDA Equity Derivatives Definitions revise, expand and restructure the earlier 2002 ISDA Equity Derivatives Definitions (although at this stage, most participants continue to use the 2002 definitions). These definitions may be expressly incorporated into an ISDA master agreement or a trade confirmation (more usually the latter); they are of particular use in drafting confirmations for the various types of products traded, and for providing agreed terms and fallbacks for unexpected events. To assist market participants, ISDA has also published User‘s Guides to its master agreements and to some sets of definitions. It is, however, fair to say that the documents comprise a formidable body for the uninitiated, notwithstanding the guides, which are not intended as a substitute for taking legal advice.


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	At the time of writing, a number of those obligations are now effective (e.g. risk mitigation obligations in relation to timely confirmations, dispute resolution, portfolio reconciliation and ~~compression,~~ reporting). The headline EMIR ~~obligations – requirements~~ that all standardised OTC derivatives between certain parties (broadly, FCs and NFCs that have exceeded the clearing threshold) should be cleared through central counterparties ~~and~~ that non-cleared trades should be appropriately collateralised ~~– are not~~ expected to be ~~fully applicable until summer 2014 at the earliest and the details (including potential~~ phase-in ~~of obligations) are yet to be finalised~~. Similar regulatory changes are being implemented in the United States and internationally to enable fulfilment of G20 commitments.		At the time of writing, a number of those obligations are now effective (e.g. risk mitigation obligations in relation to timely confirmations, dispute resolution, portfolio reconciliation, portfolio compression and reporting). The headline EMIR obligation that all standardised OTC derivatives between certain parties (broadly, FCs and NFCs that have exceeded the clearing threshold) should be cleared through central counterparties is now expected to be introduced from spring 2016 beginning with certain classes of interest rate swaps. The EMIR obligation that non-cleared trades should be appropriately collateralised is now expected to be introduced from autumn 2015, subject to certain phase-in provisions. Similar regulatory changes are being implemented in the United States and internationally to enable fulfilment of G20 commitments.


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	A number of CCPs are starting to offer buy-side access for credit, interest rates and FX clearing, and have developed or are developing their own standard form documentation. In addition, ISDA and FIA Europe (previously known as the Futures and Options Association (FOA)) have published a template (the ISDA/FOA Client Cleared Derivatives Addendum) for use by cleared swaps market participants to document the relationship between a clearing member and its client for purposes of clearing OTC derivatives transactions across CCPs. ISDA has also been developing a number of protocols and forms of agreement to assist parties with their EMIR compliance more generally. These include the ISDA 2013 EMIR NFC Representation Protocol and the ISDA EMIR Timely Confirmation Amendment Agreement Form.		A number of CCPs are starting to offer buy-side access for credit, interest rates and FX clearing, and have developed or are developing their own standard form documentation. In addition, ISDA and FIA Europe (previously known as the Futures and Options Association (FOA)) have published a template (the ISDA/FOA Client Cleared Derivatives Addendum) for use by cleared swaps market participants to document the relationship between a clearing member and its client for purposes of clearing OTC derivatives transactions across CCPs. ISDA has also been developing a number of protocols and forms of agreement to assist parties with their EMIR compliance more generally. These include the ISDA 2013 EMIR NFC Representation Protocol, the ISDA 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol and the ISDA EMIR Timely Confirmation Amendment Agreement Form.


	[The ACT has taken the position that standardisation will evolve naturally if it is beneficial and cost effective, so that no regulatory action is needed. However in the event of any action by the authorities they should ensure that the ability for companies to undertake transactions tailored to their needs is preserved.]

	[[Category:Book_Export]]		[[Category:Book_Export]]

imported>Doug Williamson: Protected "Derivatives documentation" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

2015-07-27T12:53:54Z

Protected "Derivatives documentation" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

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Revision as of 12:53, 27 July 2015

imported>Jeeten.patel@thinkpublishing.co.uk at 17:03, 20 November 2014

2014-11-20T17:03:08Z

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imported>Jeeten.patel@thinkpublishing.co.uk at 17:00, 20 November 2014

2014-11-20T17:00:06Z

← Older revision		Revision as of 17:00, 20 November 2014
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	This section describes the standard market over-the-counter (OTC) derivatives documentation currently available for documenting some of the risk management instruments described previously.		This section describes the standard market over-the-counter (OTC) derivatives documentation currently available for documenting some of the risk management instruments described previously.


	The standard OTC hedging documentation currently available falls broadly into two categories: multi-product documentation; and product-specific documentation, and takes the form of master agreements under which a number of transactions can be documented. Users of these master agreements benefit not only from the ease of documenting multiple transactions under a single agreement but also from an ability under the laws of many countries to net exposures under those transactions.		The standard OTC hedging documentation currently available falls broadly into two categories: multi-product documentation; and product-specific documentation, and takes the form of master agreements under which a number of transactions can be documented. Users of these master agreements benefit not only from the ease of documenting multiple transactions under a single agreement but also from an ability under the laws of many countries to net exposures under those transactions.


	Principal in the production of standard market multi-product derivatives documentation is the International Swaps and Derivatives Association, Inc. (ISDA), which was established in 1985 by representatives of international banks, companies and other business organisations. The central documents published by ISDA are the two 1992 Master Agreements – the multicurrency cross border master agreement and the local currency single jurisdiction master agreement – (the former being the more commonly used) – and the 2002 version of the multicurrency cross border master agreement (see for updates [http://www.isda.org here]).		Principal in the production of standard market multi-product derivatives documentation is the International Swaps and Derivatives Association, Inc. (ISDA), which was established in 1985 by representatives of international banks, companies and other business organisations. The central documents published by ISDA are the two 1992 Master Agreements – the multicurrency cross border master agreement and the local currency single jurisdiction master agreement – (the former being the more commonly used) – and the 2002 version of the multicurrency cross border master agreement (see for updates [http://www.isda.org here]).


	Changes have been made to reflect members’ experiences in using the documents and changes in market practice over the intervening decade. There are no plans to publish a 2002 version of the local currency single jurisdiction master agreement.		Changes have been made to reflect members’ experiences in using the documents and changes in market practice over the intervening decade. There are no plans to publish a 2002 version of the local currency single jurisdiction master agreement.


	==Master agreements==		==Master agreements==

imported>Jeeten.patel@thinkpublishing.co.uk at 16:59, 20 November 2014

2014-11-20T16:59:28Z

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imported>Jeeten.patel@thinkpublishing.co.uk at 16:46, 20 November 2014

2014-11-20T16:46:59Z

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	\|header1 = ~~Authors~~		\|header1 = Author
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imported>Jeeten.patel@thinkpublishing.co.uk at 16:06, 1 November 2014

2014-11-01T16:06:05Z

← Older revision		Revision as of 16:06, 1 November 2014
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	This section describes the standard market over-the-counter (OTC) derivatives documentation currently available for documenting some of the risk management instruments described previously.		This section describes the standard market over-the-counter (OTC) derivatives documentation currently available for documenting some of the risk management instruments described previously.
	The standard OTC hedging documentation currently available falls broadly into two categories: multi-product documentation; and product-specific documentation, and takes the form of master agreements under which a number of transactions can be documented. Users of these master agreements benefit not only from the ease of documenting multiple transactions under a single agreement but also from an ability under the laws of many countries to net exposures under those transactions.		The standard OTC hedging documentation currently available falls broadly into two categories: multi-product documentation; and product-specific documentation, and takes the form of master agreements under which a number of transactions can be documented. Users of these master agreements benefit not only from the ease of documenting multiple transactions under a single agreement but also from an ability under the laws of many countries to net exposures under those transactions.
	Principal in the production of standard market multi-product derivatives documentation is the International Swaps and Derivatives Association, Inc. (ISDA), which was established in 1985 by representatives of international banks, companies and other business organisations. The central documents published by ISDA are the two 1992 Master Agreements – the multicurrency cross border master agreement and the local currency single jurisdiction master agreement – (the former being the more commonly used) – and the 2002 version of the multicurrency cross border master agreement (see for updates [http://www.isda.org ~~http://www.isda.org~~]).		Principal in the production of standard market multi-product derivatives documentation is the International Swaps and Derivatives Association, Inc. (ISDA), which was established in 1985 by representatives of international banks, companies and other business organisations. The central documents published by ISDA are the two 1992 Master Agreements – the multicurrency cross border master agreement and the local currency single jurisdiction master agreement – (the former being the more commonly used) – and the 2002 version of the multicurrency cross border master agreement (see for updates [http://www.isda.org here]).
	Changes have been made to reflect members’ experiences in using the documents and changes in market practice over the intervening decade. There are no plans to publish a 2002 version of the local currency single jurisdiction master agreement.		Changes have been made to reflect members’ experiences in using the documents and changes in market practice over the intervening decade. There are no plans to publish a 2002 version of the local currency single jurisdiction master agreement.

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	The Foreign Exchange Committee, together with the BBA, more recently published the 2005 International Foreign Exchange and Currency Option Master Agreement (IFXCO) which updates the ICOM, IFEMA and FEOMA by incorporating terms from the 1998 FX and Currency Option Definitions published by ISDA, EMTA (the trade association for the emerging markets) and the Foreign Exchange Committee, as well as recommendations of the Global Documentation Steering Committee.		The Foreign Exchange Committee, together with the BBA, more recently published the 2005 International Foreign Exchange and Currency Option Master Agreement (IFXCO) which updates the ICOM, IFEMA and FEOMA by incorporating terms from the 1998 FX and Currency Option Definitions published by ISDA, EMTA (the trade association for the emerging markets) and the Foreign Exchange Committee, as well as recommendations of the Global Documentation Steering Committee.
	In co-operation with the BBA, and modelled closely on earlier versions of the IFEMA and ICOM documents, the London Bullion Market Association (LBMA) in 1994 published the IBMA for use with spot, forward and option transactions in gold and silver. The FRABBA, ICOM, IFEMA, FEOMA, and IBMA are described in greater detail later in this section.		In co-operation with the BBA, and modelled closely on earlier versions of the IFEMA and ICOM documents, the London Bullion Market Association (LBMA) in 1994 published the IBMA for use with spot, forward and option transactions in gold and silver. The FRABBA, ICOM, IFEMA, FEOMA, and IBMA are described in greater detail later in this section.
	Please note that the ICOM, IFEMA, FEOMA and IFXCO are now primarily sponsored by the Foreign Exchange Committee and can be obtained from the Financial Markets Lawyers Group website. [http://www.newyorkfed.org/fmlg/documentation/master.html (~~http://www.newyorkfed.org/fmlg/documentation/master.html~~)]		Please note that the ICOM, IFEMA, FEOMA and IFXCO are now primarily sponsored by the Foreign Exchange Committee and can be obtained from the Financial Markets Lawyers Group website. [http://www.newyorkfed.org/fmlg/documentation/master.html (here)]

	==ISDA==		==ISDA==

imported>Jeeten.patel@thinkpublishing.co.uk at 16:04, 1 November 2014

2014-11-01T16:04:49Z

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	The Foreign Exchange Committee, together with the BBA, more recently published the 2005 International Foreign Exchange and Currency Option Master Agreement (IFXCO) which updates the ICOM, IFEMA and FEOMA by incorporating terms from the 1998 FX and Currency Option Definitions published by ISDA, EMTA (the trade association for the emerging markets) and the Foreign Exchange Committee, as well as recommendations of the Global Documentation Steering Committee.		The Foreign Exchange Committee, together with the BBA, more recently published the 2005 International Foreign Exchange and Currency Option Master Agreement (IFXCO) which updates the ICOM, IFEMA and FEOMA by incorporating terms from the 1998 FX and Currency Option Definitions published by ISDA, EMTA (the trade association for the emerging markets) and the Foreign Exchange Committee, as well as recommendations of the Global Documentation Steering Committee.
	In co-operation with the BBA, and modelled closely on earlier versions of the IFEMA and ICOM documents, the London Bullion Market Association (LBMA) in 1994 published the IBMA for use with spot, forward and option transactions in gold and silver. The FRABBA, ICOM, IFEMA, FEOMA, and IBMA are described in greater detail later in this section.		In co-operation with the BBA, and modelled closely on earlier versions of the IFEMA and ICOM documents, the London Bullion Market Association (LBMA) in 1994 published the IBMA for use with spot, forward and option transactions in gold and silver. The FRABBA, ICOM, IFEMA, FEOMA, and IBMA are described in greater detail later in this section.
	Please note that the ICOM, IFEMA, FEOMA and IFXCO are now primarily sponsored by the Foreign Exchange Committee and can be obtained from the Financial Markets Lawyers Group website [http://www.newyorkfed.org/fmlg/documentation/master.html (http://www.newyorkfed.org/fmlg/documentation/master.html)]		Please note that the ICOM, IFEMA, FEOMA and IFXCO are now primarily sponsored by the Foreign Exchange Committee and can be obtained from the Financial Markets Lawyers Group website. [http://www.newyorkfed.org/fmlg/documentation/master.html (http://www.newyorkfed.org/fmlg/documentation/master.html)]

	==ISDA==		==ISDA==

imported>Jeeten.patel@thinkpublishing.co.uk at 09:20, 8 October 2014

2014-10-08T09:20:13Z

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	\|above = Treasury ~~Professional~~		\|above = Treasury professional
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imported>Jeeten.patel@thinkpublishing.co.uk at 08:41, 29 September 2014

2014-09-29T08:41:50Z

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	However, it is probably the case that a considered and negotiated master agreement, rather than the terms, will be more likely to achieve the desired result in most cases.		However, it is probably the case that a considered and negotiated master agreement, rather than the terms, will be more likely to achieve the desired result in most cases.

	==EMIR and central counterparty clearing of OTC== ~~derivatives~~		==EMIR and central counterparty clearing of OTC derivatives==
	Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR), which has direct effect in this jurisdiction, imposes a range of obligations on parties to OTC derivatives contracts – in some cases, irrespective of whether a party is a financial counterparty (FC) or a non-financial counterparty (NFC). Consequently, one of the effects of EMIR is that entities that were previously unregulated in relation to their derivatives transactions (e.g. many corporates) will now have to comply with all applicable EMIR obligations.		Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR), which has direct effect in this jurisdiction, imposes a range of obligations on parties to OTC derivatives contracts – in some cases, irrespective of whether a party is a financial counterparty (FC) or a non-financial counterparty (NFC). Consequently, one of the effects of EMIR is that entities that were previously unregulated in relation to their derivatives transactions (e.g. many corporates) will now have to comply with all applicable EMIR obligations.
	At the time of writing, a number of those obligations are now effective (e.g. risk mitigation obligations in relation to timely confirmations, dispute resolution, portfolio reconciliation and compression, reporting). The headline EMIR obligations – requirements that all standardised OTC derivatives between certain parties (broadly, FCs and NFCs that have exceeded the clearing threshold) should be cleared through central counterparties and that non-cleared trades should be appropriately collateralised – are not expected to be fully applicable until summer 2014 at the earliest and the details (including potential phase-in of obligations) are yet to be finalised. Similar regulatory changes are being implemented in the United States and internationally to enable fulfilment of G20 commitments.		At the time of writing, a number of those obligations are now effective (e.g. risk mitigation obligations in relation to timely confirmations, dispute resolution, portfolio reconciliation and compression, reporting). The headline EMIR obligations – requirements that all standardised OTC derivatives between certain parties (broadly, FCs and NFCs that have exceeded the clearing threshold) should be cleared through central counterparties and that non-cleared trades should be appropriately collateralised – are not expected to be fully applicable until summer 2014 at the earliest and the details (including potential phase-in of obligations) are yet to be finalised. Similar regulatory changes are being implemented in the United States and internationally to enable fulfilment of G20 commitments.