ISDA stands for the International Swaps and Derivatives Association, a trade organization of participants in the market for over-the-counter (OTC) derivatives. It was established in 1985 and is headquartered in New York City. ISDA has over 1,000 member institutions from 79 countries, including corporations, investment managers, government entities, insurance companies, energy and commodities firms, and international and regional banks.
The main purpose of ISDA is to promote and improve the trading of swaps and derivatives by reducing counterparty risk, increasing transparency, and improving infrastructure. One of the key contributions of ISDA is the development of the ISDA Master Agreement, a standardized contract used to govern OTC derivatives transactions. This agreement outlines the terms to be applied to a derivatives transaction between two parties, typically a derivatives dealer and a counterparty. The ISDA Master Agreement is accompanied by a customized schedule and sometimes a credit support annex, both of which are signed by the two parties in a given transaction.
