2025-04-11 Meeting notes
- Elisa Kendall
Date
Apr 11, 2025
Participants
@Elisa Kendall
@John Gemski
@Pete Rivett
@Rob Warren
Discussion
Today we started discussion of DER-55, to rework the current master agreements ontology for OTC derivatives. There are a number of clauses mentioned in the ontology as components of the master agreement that should be more general contract provisions, added to contracts, and referenced via restrictions on an OTC derivatives master agreement rather than being defined by explicit classes. For the ISDA master agreement specifically, we can create an example that incorporates the clauses in the 2002 agreement, available at https://www.isda.org/a/XZEDE/2002-ISDA-Master-Agreement-English.pdf.
A high-level view of what an ISDA master agreement (template) does is provided at https://www.investopedia.com/terms/i/isda-master-agreement.asp and What Is an ISDA Agreement and How Does It Work? .
Some specific definitions and discussion of terms including netting, cross-product netting, cross margining, and others are linked from https://www.isda.org/2025/04/04/cross-product-netting-under-the-us-regulatory-capital-framework/ .
An example ISDA master agreement between Bank of America and LKQ corporation, which we could use to test the ontology, is available at https://www.sec.gov/Archives/edgar/data/1065696/000119312511118050/dex101.htm .
An example insurance agreement associated with a particular swap that references the ISDA master agreement is https://services.austintexas.gov/edims/document.cfm?id=208717
A users' guide provided by ISDA is available at
https://www.isda.org/2022/05/11/video-understanding-the-isda-master-agreement/
We will work towards moving some of the general contract clauses to the contracts ontology as appropriate, and to work through a couple of examples to ensure that we can represent these kinds of agreements properly over the coming weeks. Note that some clauses are specific to financial contracts, such as tax withholding provisions, while others, such as termination clauses, apply more generally. We have some but not all of the general clause terminology already in contracts in FND.
Note that according to https://www.contractscounsel.com/t/us/isda-agreement, there are two versions of ISDA agreements that are commonly used, depending on the situation: (1) the 1992 ISDA Master Agreement (Multicurrency – Cross Border), and (2) the 2002 ISDA Master Agreement. Thus, depending on the distinctions, we might choose to include a class called ISDA master agreement with two instances, or simply create two instances of an OTC derivatives master agreement, one for each of these cases.