The International Swaps and Derivatives Association (ISDA) master agreement is a widely used document in the financial industry that outlines the terms and conditions for over-the-counter (OTC) derivatives transactions. The master agreement provides a standardized framework for counterparties to negotiate and execute derivative transactions, reducing legal and operational risks. In this article, we will discuss the structure of the ISDA master agreement.

Parties to the Agreement

The ISDA master agreement is a bilateral agreement between two parties, typically a financial institution and a counterparty. The parties to the agreement are identified in the introductory paragraph of the agreement. Each party is represented by its legal entity name, address, and other identifying information.


The next section of the ISDA master agreement is the definitions section. This section defines key terms used throughout the agreement, including terms such as “Affiliate,” “Termination Date,” “Event of Default,” and “Netting.” The definitions section is critical to the understanding of the agreement, as it clarifies the meaning of potentially ambiguous terms.

General Terms

The general terms section of the ISDA master agreement sets out the general terms and conditions that apply to all transactions executed under the agreement. It includes provisions regarding representations and warranties, collateral, events of default, and termination. This section also sets out the parties` obligations regarding documentation and communications.


The schedule to the ISDA master agreement is a customizable section that allows the parties to specify certain terms applicable to their particular transaction. These terms can include the type of derivative, the underlying asset, the notional amount, and the pricing method. The schedule is a vital aspect of the ISDA master agreement, as it allows parties to tailor the agreement to their specific needs.


Confirmations are separate documents that memorialize the details of each individual transaction executed between the parties under the ISDA master agreement. Confirmations typically include the effective date, termination date, notional amount, and other transaction-specific terms. While confirmations are not part of the ISDA master agreement, they are critical to the parties` understanding of their respective rights and obligations.


The ISDA master agreement is a standardized document that provides a framework for negotiating and executing OTC derivative transactions. Its structure includes an introductory paragraph identifying the parties, a definitions section, general terms and conditions, a customizable schedule section, and confirmations documenting each transaction. Understanding the structure of the ISDA master agreement is essential for anyone involved in OTC derivative transactions.