Advanced ISDA® Master Agreement Negotiations

ISDA Master Agreement Training: Part One

ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc. The programme is neither sponsored by nor affiliated with the International Swaps and Derivatives Association, Inc.

Review of the Architecture of ISDA Documentation

ISDA Master Agreement

• Detailed clause-by-clause review (2002) Single Agreement Cherry Picking

Advanced Netting Legal Opinions

• Governing law on insolvency

Conditions Precedent

Withholding tax

Representations

Undertakings

Events of Default

Termination Events

Early Termination

Transfer

Multi-branch Parties

Waiver of immunity

• Arbitration clauses

A Comparison of ISDA 2002 Master Agreements and 1992 Master Agreements

• Events of default provisions Grace periods

• Scope of the credit support default

• Breach of agreement

• Specified Transactions

• Cross default provisions

• Merger without assumption

Termination Events

• Scope of Illegality

• Force Majeure

• Grace periods

• Tax event upon merger

Methodology of calculating payments on early termination

• First Method

• Second Method

• Market Quotation

• Loss

• Set-off

• Unpaid amounts

• Close-out amount

ISDA Master Agreement Training: Part Two

Schedule to ISDA Master Agreement

• Parts 1 to 5 – Negotiating points

• EMIR related amendments Relevant EMIR Protocols: 2013 EMIR Non-Financial Counterparty Representation

• 2013 Reporting Protocol

• 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol

• Adherence Letters

• Suggested EMIR Related Amendments

ISDA Confirmation

• A process on how trades are done

• EMIR reporting 2013 EMIR Reporting Protocol

• Grey area

ISDA Credit Support Annexes and ISDA Credit Support Document Deeds

• Legal opinions

• English law deeds and annexes

• New York law annexes

• 1995 ISDA Credit Support Annex – Paragraph 11

• Close-out netting

• Valuation agent

• Eligible Credit Support

• Haircuts and Valuation Percentages

Netting and Valuation

• Settlement Netting

• Close-out Netting

• Calculations

• Mark to Market valuations – How Swaps are Valued

Events of Default and Termination Events

• Steps to follow on Early Termination

• Conditions Precedent

• Timeline – summary of the process

• Checklists Contractual terms breach

• Events of Default and Termination Events

• Legal, commercial and operational considerations

• Early Termination Procedures

Case law

• Section 2(a)(iii) Lomas and others v JFB Firth Rixson Inc. and others

• ISDA Amendment

GROUP CASE STUDY: Participants are to work in small groups to draft and negotiate with another group a first draft of the ISDA Schedule to the 2002 ISDA Master Agreement in accordance with the client instructions provided in the case study pack.

ISDA Negotiator Training Conclusion

Training Objectives

By the end of this course, participants will be able to:

• Master the architecture of the 2002 ISDA Master Agreement, analysing each clause in detail to uncover the complex interplay between the core provisions themselves, as well as their mechanical interaction with the ISDA Schedule

• Understand the key differences between the 1992 and 2002 versions of the ISDA Master Agreement

• Receive and apply an exclusive negotiation guidance note containing targeted questions to ask counterparties, strategic negotiation points, and drafting points, allowing you to successfully negotiate the ISDA Schedule in accordance with market standard practices

• Review and discuss the Credit Support Annex (CSA) along with standard market practices

• Assess the legal and commercial mechanics of Close-out Netting and Valuations, identifying common pitfalls and the primary catalysts for valuation disputes

• Manage default scenarios with confidence and mitigate risks using the detailed, step-by-step procedural timelines and checklists required when faced with an Event of Default or Termination Event

• Apply theoretical legal concepts directly to practice through an interactive group case study actively negotiating an ISDA Schedule with other participants

Training Course Summary

Our ISDA master agreement training covers the pertinent issues related to drafting, negotiating, and understanding the ISDA Master Agreement. The course provides a comprehensive ISDA documentation framework, beginning with a detailed clause-by-clause analysis of the 2002 ISDA Master Agreement, followed by a comparative analysis between the 1992 and 2002 versions.

We will undertake a detailed analysis of the ISDA Schedule, including any EMIR Regulation related language. Participants will learn the key market negotiation points relevant to negotiating an ISDA Master Agreement, including the strategic questions to ask depending on which party you represent. The course discusses the Credit Support Annex (“CSA”), ancillary ISDA documentation, settlement netting, close-out netting, and the legal mechanics of how swaps are valued.

Finally, we cover the operative provisions for Events of Default and Termination Events, providing procedural timelines and checklists that outline notice requirements, as well as legal, commercial, and operational points to manage. The training incorporates relevant case law and culminates in an Interactive Group Case Study involving the documentation and negotiation of an ISDA Schedule using a live case study