What Is the Significance of the ISDA Master Agreement in OTC Derivatives Credit Intermediation? ▴ Learn

What Is the Significance of the ISDA Master Agreement in OTC Derivatives Credit Intermediation?

The ISDA Master Agreement is a standardized document used to govern all OTC derivatives transactions between two parties. Its primary significance lies in establishing a single legal framework for all trades, especially regarding netting.

It ensures that in the event of a counterparty default, all outstanding transactions can be legally netted down to a single payment obligation, drastically reducing credit and settlement risk.

How Does the Use of a ‘Master Netting Agreement’ Reduce Counterparty Exposure for a Prime Broker?

How Does Multilateral Netting Differ from Bilateral Netting?

What Are the Primary Differences between an ISDA Master Agreement and a Traditional Futures Account Agreement?

How Do ISDA Master Agreements Mitigate Counterparty Risk in OTC Derivatives, Even with Non-Custodial Trading?