A Practical Guide to the 2003 ISDA Credit Derivatives Definitions

Credit Derivatives Trader

A user-friendly guide to these complex Definitions for market practitioners and those new to credit derivatives documentation.

In addition to a comprehensive section by section commentary on the Definitions themselves, this book ensures that you understand:

• the evolution of the global credit derivatives market, the main credit derivative products and risks associated with them
• legal issues affecting credit derivatives and some causes celebres
• new developments in the credit derivatives market, including master confirmation agreements, ISDA credit derivatives documentation projects and electronic processing of credit derivatives contracts.

Includes a glossary of key terms used in the Definitions and reproduction of the Definitions, the May 2003 Supplement to the Definitions and the 60 Business Day cap side letter all reproduced with the kind permission of the International Swaps and Derivatives Association, Inc.

"Credit Derivatives Definitions" is Paul Harding's lucid contribution to sorting out the evolution and current issues of ISDA language.  He clearly defines key products and then clearly defines the key issues surrounding the documentation of these products.  Harding translates the international Tower of Babelof ISDA documentation and achieves
the previously impossible task of writing a book about credit derivatives documentation that is a pleasure to read.  Paul Harding's book is an essential addition to the desk of every credit derivatives trader, structurer, marketer, and investor.
Janet Tavakoli, President, Tavakoli Structured Finance, Inc.

For a sector of the global derivatives industry that is still a fairly recent phenomenon, this book already feels long overdue. Any practitioner that has had to work with the ISDA Definitions over recent years, will have wondered why there wasn't a user's guide. Now there is.
Kurt Crommelin, Head of Legal, HVB Corporates & Markets, Bayerische Hypo- und Vereinsbank AG

"When I first heard of Paul Harding's plan to write this book, I welcomed it. In particular, since I know how helpful his books are in both the day-to-day work and the training of new colleagues...  All his books have been practical guides making the complicated, simple. He has done the same here. This book not only concentrates on the Credit Derivatives Definitions themselves, it also explains the historical background, the uses of credit derivatives and the risks associated with them. This combined with a step-by-step explanation of the Credit Derivatives Definitions creates a good overview and understanding of the whole topic. I am pretty sure that traders, negotiators and lawyers will find this book very helpful. And I will not be surprised, if in future negotiators try to convince me by referring to this book!" - Wilfried F. Schütte, Senior Legal Counsel, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main

Practitioner friendly, "A Practical Guide To The 2003 ISDA Credit Derivatives Definitions" is a very useful title for credit derivative practitioners seeking a reference text for the documentation of credit default swaps.
The Finance and Treasury Professional, August 2004

Other titles by Paul C Harding:

A Practical Guide to Using Repo Master Agreements, by Paul C Harding and Christian A Johnson (published 2004)

Table of Contents

A Practical Guide to the 2003 ISDA Credit Derivatives Definitions

Contents
Acknowledgements
About the author
Foreword
Preface
Glossary

Chapter 1 General overview
Introduction
Evolution of the credit derivatives market and market size
Uses of credit derivatives
Their main use: transferring risk to a third party
The main credit derivatives products
Risks associated with credit derivatives

Chapter 2 Legal issues affecting credit derivatives
The insurance question
Gaming
Netting
Transferability
Confidentiality
Selected causes célèbres

Chapter 3 The 2003 ISDA Credit Derivatives Definitions
Preamble
Article I Certain General Definitions
Article II General Terms Relating to Credit Derivative Transactions
Article III Conditions to Settlement
Article IV Credit Events
Article V Fixed Amounts
Article VI General Terms Relating to Settlement
Article VII Terms Relating to Cash Settlement
Article VIII Terms Relating to Physical Settlement
Article IX Additional Representations and Agreements
of the Parties
Article X Novation Provisions
ISDA fallbacks in the 2003 Definitions

Chapter 4 New developments
The ISDA Credit Derivatives Market Practice
Committee and working groups
Rule on when credit protection starts
The 2003 Master Credit Derivatives Confirmation Agreements
The May 2003 Supplement
The 60 Business Day Cap on Settlement
Capital relief for Restructuring under Basle II
Standardisation of Scheduled Termination Dates
Initial stub period
ISDA documentation projects
Electronic processing of credit derivative contracts
Credit Index Futures
Further reading
Index
Annex 1 2003 ISDA Credit Derivatives Definitions
Annex 2 May 2003 Supplement to the 2003 ISDA
Credit Derivatives Definitions
Annex 3 Letter Agreement Relating to 60 Business Day Cap
on Settlement

Reviews

"Credit Derivatives Definitions" is Paul Harding's lucid contribution to sorting out the evolution and current issues of ISDA language.  He clearly defines key products and then clearly defines the key issues surrounding the documentation of these products.  Harding translates the international Tower of Babelof ISDA documentation and achieves
the previously impossible task of writing a book about credit derivatives documentation that is a pleasure to read.  Paul Harding's book is an essential addition to the desk of every credit derivatives trader, structurer, marketer, and investor.
Janet Tavakoli, President, Tavakoli Structured Finance, Inc.

For a sector of the global derivatives industry that is still a fairly recent phenomenon, this book already feels long overdue. Any practitioner that has had to work with the ISDA Definitions over recent years, will have wondered why there wasn't a user's guide. Now there is.
Kurt Crommelin, Head of Legal, HVB Corporates & Markets, Bayerische Hypo- und Vereinsbank AG

When I first heard of Paul Harding’s plan to write this book, I welcomed it. In particular, since I know how helpful his books are in both the day-to-day work and the training of new colleagues...  All his books have been practical guides making the complicated, simple. He has done the same here. This book not only concentrates on the Credit Derivatives Definitions themselves, it also explains the historical background, the uses of credit derivatives and the risks associated with them. This combined with a step-by-step explanation of the Credit Derivatives Definitions creates a good overview and understanding of the whole topic. I am pretty sure that traders, negotiators and lawyers will find this book very helpful. And I will not be surprised, if in future negotiators try to convince me by referring to this book!
Wilfried F. Schütte, Senior Legal Counsel, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main

Related Titles

• Derivatives Regulation and Legal Risk: Managing Uncertainty in Derivatives Transactions »
• Financial Futures, 2nd Edition »
• Documentation For Derivatives: 4th Edition Vol. 2 (Hardback) »
• Credit Derivatives, Securitizations and the New Regulatory Environment »
• A Practical Guide to IFRS for Derivatives and Structured Finance »
• How to Understand and Use Mathematics for Derivatives, Vol. 1 »

Digital Products  £$€