Signing an ISDA agreement

Before an MIV can engage in a hedging transaction with MFX (or anyone else), both parties must enter into a master agreement which commits both parties to certain procedures and rules regarding payment terms and settlements. The master agreements governing foreign exchange or currency swaps are known as the "ISDA", which is a standardized contract named for the organization that established global financial derivatives standards more than 20 years ago - the International Swap Dealers Association. The most recent version is the 2002 ISDA.

The agreement comes in three parts the ISDA Master Agreement, the ISDA schedule, and the Credit Support Agreement (CSA).

• The ISDA Master Agreement contains standardized terms that hold for all derivative contracts and thus does not need to be negotiated. MFX can help to familiarize you with these standard terms.



• The ISDA schedule sets the terms and information that are unique to the contract such as specific conditions for unwinding trades, particular covenants, notification, information disclosure, etc. MFX can provide standard terms in most areas to help simplify the process for agreeing to an ISDA schedule.



• The CSA primarily covers collateral arrangements. This normally requires the greatest amount of negotiating time. However, since MFX generally does not require collateral of its clients the CSA is moot.