Only ISDA members are eligible to receive the Association’s legal opinions on the enforceability of the netting provisions of the ISDA Master Agreements. The opinions enable institutions to determine that those netting provisions effectively reduce credit risk, allowing them to exchange regulatory margin on a net basis and reduce capital requirements in many jurisdictions.
ISDA Netting and Collateral Opinions
The netting opinions address the enforceability of the termination, bilateral close-out netting and multibranch netting provisions of the 1992 ISDA Master Agreement and 2002 ISDA Master Agreement. These opinions enable institutions to determine that the netting provisions effectively reduce credit risk, allowing them to exchange regulatory margin on a net basis and reduce capital requirements in many jurisdictions. ISDA has commissioned netting opinions for over 60 jurisdictions.
ISDA has also commissioned legal opinions on the ISDA Credit Support Documents from over 50 different jurisdictions. These collateral opinions assist members in ensuring the validity and enforceability of collateral arrangements entered into pursuant to the ISDA Credit Support Documents, thereby facilitating the due diligence required for compliance with margin regulations and recognition of the benefits of collateral for capital purposes.
ISDA Clearing Opinions
ISDA has commissioned over 55 clearing member and client reliance opinions with regards to the ISDA/FIA Client Cleared OTC Derivatives Addendum when used in conjunction with an ISDA Master Agreement. The opinions address the enforceability of the close-out netting, set-off and default provisions of the ISDA/FIA Client Cleared OTC Derivatives Addendum from the perspective of the clearing member and client, respectively.
In addition, ISDA and FIA jointly commission and have published 28 opinions addressing: (i) the enforceability of a US registered futures commission merchant’s (FCM’s) close out and netting rights when facing its customers in various jurisdictions under the FIA-ISDA Cleared Derivatives Addendum together with an underlying futures and options agreement; and (ii) the ability of customers to net against their respective FCM’s, and against the three CCPs which support the FCM model of clearing (being CME, ICE and LCH).
ISDA is also in the process of commissioning a number of clearing related opinions to assist ISDA members in applying the risk weightings under CRR Article 305.
Access to opinions and opinion summaries are among the prime benefits of ISDA membership. ISDA members enjoy many important advantages. To view full list of member benefits, please select member type: