Standard 2002 Isda Master Agreement

9 10 2021

A material change is the calculation of the amount of the financial statements for a transaction that terminates prematurely as a result of a default event or termination event. In the 1992 form, the final amount of a closed transaction was determined on the basis of the market quotation (which required the quotation of traders) or the loss (which was the recognition of a party`s loss or profits), as provided for in the annex to the framework contract. The changes to the closing method were motivated by concerns that significant quotes could be difficult to obtain in tight market conditions and that the “Loss” standard was too subjective. In Form 2002, the closing amount is the amount of losses or costs or profits (as the case may be) in the circumstances then prevailing, which replace the essential conditions of the completed transactions and any option rights or ensure the economic equivalent of the essential conditions of the completed operations and all option rights. When determining the amount of the close-out, the determining party (i.e. the party determining the closing amount) is responsible for acting in good faith and applying economically appropriate procedures to achieve an economically reasonable result. Subject to this Standard, the designated Contracting Party may consider all relevant information, including third-party offers, market data provided by third parties and certain types of internally generated information. The determining party must take into account tenders or market data provided by third parties, unless it has a good faith belief that they are not readily available or that they do not meet “economically reasonable” standards. It goes without saying that counterparties may negotiate and accept bilaterally all amendments that do not fall within the scope of the Protocol. The Protocol in no way impedes freedom of contract, whether or not the parties have complied with the Protocol. If the parties to a 2002 framework agreement wish to amend the terms of the protocol, as they would otherwise do, for example, for a transaction involving a specific GDR definition brochure, Section 5(b) of the protocol sets out how they should do so. The framework contract is the central document around which the rest of ISDA`s documentary structure is built.

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