DERIVATIVES

ISDA Releases Standardized Agreement for Custody of Independent Amounts

The International Swaps and Derivatives Association, Inc. (ISDA) has launched the ISDA 2013 Account Control Agreement (ISDA ACA), a standardized framework for custody agreements in tri-party derivatives transactions.

By Jake Safane jsafane@globalcustodian.com October 15, 2013 6:11 PM GMT

The International Swaps and Derivatives Association, Inc. (ISDA) has launched the ISDA 2013 Account Control Agreement (ISDA ACA), a standardized framework for custody agreements in tri-party derivatives transactions.

Specifically, the ISDA ACA provides an agreement between two over-the-counter (OTC) derivatives counterparties and a third-party custodian for the segregation of Independent Amounts (IA). Under the terms set by the contract, the custodian will hold and release IA to the counterparties. In addition to the standardized agreement, the ISDA ACA also includes an annex that offers additional provisions for parties to include as they wish.

The framework came as result of regulatory changes and the general risks associated with IA, which has led to stronger segregation requirements. The agreement is available on the Collateral section of ISDA’s website.