Derivatives & The ISDA Master Agreement - Key Concepts Explored

Introduction

This course will help you understand how to identify, analyse and describe the key defining factors of all derivatives, including:

• Financial nature
• Two or more parties
• Value dependant on underlying asset(s)
• Importance and effects of leveraging

You will be introduced to the most common products in the UK and Western financial markets.

This course will also provide an introduction to the most popular world markets, such as the Chicago Mercantile Exchange, LSE and NYSE and role of the FCA, FSA and SEC. It will discuss key terms such as ‘TOC’, hedging, risk profiles and assessment. The history and development of the ISDA Master Agreement (the ‘ISDA’) will be introduced, along with the role, use and difference of the ‘two versions’ being the 1992 and 2002.

Within that amendment and adaption process the course will run through how to identify the key negotiation and drafting strategies, responses, implications and successful approaches commonly used.

The session will cover how to properly consider and advise on the impact of such amendments, direct, indirect and consequential.

What You Will Learn

This live and interactive course will cover the following:

• Futures contracts
• Forwards
• Options
• Swaps, including interest rates
• Identify the key elements of the ISDA and explore which commonly require amendment and adaptation by its users, including:
• Purpose, thresholds, role of pari passu and protocol fee
• ‘The three pillars’ being ‘single agreement’, ‘flawed asset’ and ‘close-out netting’
• Framework being the master agreement, schedule, confirmations, definitions and credit support documentation
• Transfer mechanics and section 7
• Early termination and section 6
• Default and section 5
• Impact and importance of ‘multi-branch’ election and section 10
• Termination options and mechanics
• CSAs and their roles in the ISDA
• Common termination events such as illegality, tax event before merger and credit event upon merger
• Standard grace periods
• Impact of sanctions and ISDA ‘illegality’
• ‘Force majeure’ and ‘ultra vires’ section 13
• Governing laws and enforcement

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.