ISDA is a trade organization created by the private negotiated derivatives market that represents participating parties. This association has been operating since 1985 which helps to improve the private negotiated derivatives market by identifying and reducing risks in the market.
ISDA has over 950 member institutions from 76 countries. These members comprise a broad range of derivatives market participants, including corporations, investment managers, government and supranational entities, insurance companies, energy and commodities firms, and international and regional banks.
ISDA was created to make the world of privately negotiated derivatives safer and more efficient. The ISDA identifies its three key work areas :
- Reducing counterparty credit risk
- Increasing transparency
- Improving the operational infrastructure of the derivatives industry
The ISDA is responsible for creating and maintaining the ISDA Master Agreement that is used as a template for discussions between a dealer and the counterparty looking to enter a derivatives transaction. The ISDA Master Agreement was first published in 1992 and was updated in 2002. It provides an outline of all the areas for negotiation in a typical transaction. This includes events of default and termination events, how the agreement will be closed out if an event occurs, and even how tax consequences will be dealt with.
Management site 