Learning from the crisis

Author: | Published: 3 Oct 2011

On July 8 2011, the International Swaps and Derivatives Association (Isda) published the 2011 Isda Equity Derivatives Definitions (the 2011s) – the first results of an 18-month process to expand, update and standardise the terms used to document these transactions. The process was initiated both to meet bank supervisor mandates and to incorporate lessons learned during the financial crisis.

It's been almost a decade since Isda last published equity derivatives definitions in 2002 (the 2002s). Since then, Isda had published close to 50 product-specific additional contractual term annexes.

The 2002s were widely used as a base document, but also widely amended both in Isda published equity documentation and in bilateral bespoke documentation. This occurred for a variety of reasons, but at its heart the reason was that the 2002s were limited in scope as far as product features and risk allocation provisions and were thought of as a starting place only...