LO 25.1: Explain the purpose o f an ISD A master agreement.
The International Swaps and Derivatives Association (ISDA) Master Agreement standardizes over-the-counter (OTC) agreements to reduce legal uncertainty and mitigate credit risk. This is accomplished by creating a framework that specifies OTC agreement terms and conditions related to collateral, netting, and termination events. The Master Agreement can cover multiple transactions by forming a single legal contract with an indefinite term.
N e t t i n g a n d C l o s e – O u t P r o c e d u r e s
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