The following platform agreements, that vary by industry and sometimes by dealer, are typically required to transact in this 500 trillion dollar market.
ISDA Master Agreements
This agreement is required to enter into any over the counter derivative transactions. The ISDA Master Agreement establishes the credit relationships (events of defaults, termination rights, dispute mechanism, etc.) between the parties that apply to all transactions subject to the ISDA. The ISDA Master Agreement does not speak to the details of any transaction. Confirmations set forth the specific details. This is the reason that one ISDA Master Agreement can govern all of your derivatives transactions from interest rate swaps to commodity transactions.
- 1992 Form ISDA Master Agreement
- 2002 Form ISDA Master Agreement
- Credit Support Annex
- Credit Support Annex for Variation Margin (VM)
Derivatives Master Confirmations
A Derivative Master Confirmation (typically subject to the ISDA Master Agreement) establishes the material terms of a type of derivative transaction so that the parties can exchange the basic economics when trading and refer back to the master confirmation for details.
- Total Return Swap Master Confirmations
- Equity Option Master Confirmations
- FX Master Confirmations
- Variance Swap Master Confirmations
- Volatility Swap Master Confirmations
- Commodity / Energy Derivatives Master confirmations
Prime Brokerage Agreements
The prime brokerage relationship provides for terms under which the dealer finances a client’s assets. Without a lockup of your prime brokerage agreement, this is overnight / secured lending by the dealer. The PB agreement establishes the dealer’s rights to liquidate, call for more collateral, indemnities, etc. The lockup stabilizes a client’s funding. Depending on the dealer and types of financing, there are various structures offered by the dealers for the client’s consideration.
- U.S. Broker Dealer Financing
- Arranged Financing
- International Financing
- Wind down
- Committed line
Futures / Clearing Arrangements
These agreements are typically negotiated as part of a prime brokerage relationship or ISDA relationships. They provide access to different listed markets and / or access to a broader range of counterparts with whom to transact.
- Futures Agreements
- Options Agreements
- FX supplement – to ISDA Master Agreements or Prime Brokerage Agreements
- Fixed Income Clearing Agreements
- FX Clearing Agreements
Master Repurchase Agreements
“A global agreement for use when parties may enter into transactions in which one party (a “Seller”), acting through a Designated Office, agrees to sell to the other (a “Buyer”), acting through a Designated Office, securities and financial instruments against the payment of the purchase price by the Buyer to the Seller, with a simultaneous agreement by the Buyer to sell to the Seller securities equivalent to such securities at a date certain or on demand against the payment of the repurchase price by the Seller to the Buyer.”
- Global Master Repurchase Agreements (“GMRA”)
- Master Repurchase Agreements (“MRA”)
- Annexes – negotiated by country and / or asset type
Securities Lending Agreements
“An agreement for use when parties may enter into transactions in which one party (a “Lender”) will lend to the other party (a “Borrower”) certain securities against a transfer of collateral.”
- Global Master Securities Lending Agreements (“GMSLA”)
- Master Securities Lending Agreement (“MSLA”)
- Master Securities Forward Transaction Agreement (“MSFTA”)
- Overseas Securities Lending Agreement (“OSLA”)
Custody agreements provide for a third party to hold one’s assets or property. The third party may also be engaged in a tri-party arrangement to hold the assets or property as support for a trading or financing arrangement between two parties (e.g., ISDA Master Agreement, prime brokerage arrangement, etc.).
Master Netting Agreements
Forms vary by dealer. They provide for margin and operational efficiency across multiple products (cash / derivative agreements).
- Master Netting Agreements
- Bridge agreements
Koya Law infuses technology into its law practice to ensure a more transparent and knowledgeable negotiation process. The focus of negotiations should remain on the material terms of the agreements and not be mired in the process (i.e., worrying about who the agreement is with, what agreements are being negotiated, locating the last movement on a contract, etc.). We’ve built web based applications so that we can provide clients with weekly status reports that identify who the agreement is with and next steps.
We identify and track (using proprietary technology), the critical terms of agreements and fallbacks. We track progress on agreement terms for clients and focus on providing them with market color and context to help them make educated decisions with respect to their agreements.
We are often tasked with large scale projects that involve the review of agreements, identifying weaknesses, recommending and effecting a renegotiation effort to standardize terms of agreements for our clients across dealers and agreements with each dealer.
We have become dominant in this arena due to our efficiency, providing relevant market color, focus on closing negotiations, thoroughness and diligent representation of our clients.
Koya DocuTracker is a SaaS product that monitors and manages the credit, risk, operational and legal terms of complex and repeatable financing / trading agreements (ISDA, PB Agreements, Lockups, Futures Agreements, and Repurchase Agreements). These agreements are the building blocks for most transactions involving leverage; for firms that enter into derivative or financing transactions on a regular basis, navigating the credit and risk terms in these arrangements is a challenge.
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