3 - Interpreting the ISDA Master Agreement

Summary

Every position in the financial markets, from a vanilla interest rate swap to a syndicated loan, from a repo to a bond, is a contract. Contractual risk mitigation techniques, such as Events of Default, are more significant in sectors where parties enjoy fewer public sector regulatory protections, as is the case in syndicated loans and derivatives, but contractual relationships underpin all financial positions. More complex structures, such as synthetic securitisations or a chain of interests in intermediated securities may involve multiple parties and span diverse jurisdictions, but in legal terms they are merely combinations of contracts. The same applies to products which are shrouded in jargon or which seem exotic at the time.