ISDA Announces New Modules for Automated Derivative Documentation Tool
ISDA and Linklaters announced that they will make three new documentation modules available on ISDA Create during 2020. ISDA Create is an online solution that automates the process of producing and agreeing derivatives documentation and enables the capture of valuable structured legal data in a complete digital record. The documents covered by the new modules include generic amendment agreements, EONIA Bilateral Template Amendment Agreement, and schedules to certain Master Agreements. The three new documentation modules being added in 2020 will join the existing ISDA Create initial margin module, which allows users to put in place the documentation necessary to meet regulatory initial margin requirements. In addition, ISDA has launched the ISDA Clause Library, a tool that sets out standard drafting options for frequently negotiated provisions within the ISDA Master Agreement, in addition to the most common variants of these provisions. The library will also be incorporated into the ISDA Create.
The documents covered by the new modules available on ISDA Create include:
- Generic amendment agreements to ISDA published documents. These forms, which are adapted from the March 2003 ISDA published form, allow users to complete any amendment to one or more ISDA published documents. There are many potential use cases for these amendment agreements, including by asset managers, which regularly alter the terms of their umbrella agreements. The new module will enable them to add or remove clients or make customized client-specific amendments completely online. Documenting these amendments via ISDA Create will provide firms with a complete and accurate data set of the terms agreed in the amendment, as well as a transparent audit trail of changes. The generic amendment agreements will be available from July 2020.
- The recently published EONIA Bilateral Template Amendment Agreement, which enables parties to update references to EONIA in their documentation given the expected permanent cessation of that rate in January 2022. Other interest rate reform documents will be added to this module as they become available. These will include the suite of template provisions that will accompany the forthcoming interbank offered rates fallbacks protocol, as well as agreements to allow participants to replace the effective federal funds rate with SOFR in their bilateral credit support annexes. The EONIA Bilateral Template Amendment Agreement will be available from July 2020.
- The schedules to the 1992 ISDA Master Agreement (Multicurrency – Cross Border), the ISDA 2002 Master Agreement, and the 2002 forms of the Master Agreement under French and Irish law. The 1992 ISDA Master Agreement (Multicurrency – Cross Border) and the ISDA 2002 Master Agreement will be available in the fourth quarter of 2020, with the ISDA 2002 Master Agreement under French and Irish law following soon after.
The ISDA Clause Library aims to reduce instances of differently worded clauses that essentially achieve the same outcome, making contract negotiation more efficient and improving the consistency and accuracy of legal agreement data. In developing the ISDA Clause Library, ISDA conducted a review of thousands of Master Agreements, focusing on the substance and outcome of each clause rather than the specific wording. This resulted in the ISDA Documentation Taxonomy, which provides a framework for identifying and categorizing commonly used clause variants. The ISDA Clause Library provides standard form drafting options, allowing users to construct clauses that achieve the clause outcomes expressed within the ISDA Documentation Taxonomy. ISDA Clause Library will be expanded in the fourth quarter of 2020 to include ISDA credit support documentation under English, New York, French, Irish, and Japanese laws. The ISDA Clause Library and underlying ISDA Documentation Taxonomy will be maintained over time to reflect changes to market and legal standards.
- Press Release on ISDA Create
- Press Release on ISDA Clause Library
- Factsheet on ISDA Clause Library (PDF)
Keywords: International, Banking, Securities, Derivatives, Initial Margin, Documentation, ISDA Create, ISDA Clause Library, EONIA, Interest Rate Benchmark, Regtech, ISDA
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