About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

ISDA Publishes 2011 Equity Derivatives Definitions

Subscribe to our newsletter

The International Swaps and Derivatives Association, Inc. (ISDA) announced today the publication of the 2011 ISDA Equity Derivatives Definitions. The Definitions represent a key development in the ongoing industry initiative to increase standardization and automation and further reduce risk across over-the-counter (OTC) derivatives markets.

The Definitions, published on July 8, include a Main Book and an Appendix, and are structured to allow for periodic updating. The Main Book contains the core definitions and provides a menu of provisions that can be combined to create different transactions. The Appendix to the Main Book contains tables setting out possible elections, consequences and fallbacks. The 2011 Definitions are drafted to be principles based, flexible and modular.

“The publication of the 2011 Equity Derivatives Definitions represents an important element in the derivative industry’s commitment to standardize these contracts, increase automation and electronic confirmations and to enhance transparency,” said Eric Litvack, ISDA Board Member, Chair of the ISDA Equity Derivatives Steering Committee and Managing Director, Société Générale. “The Definitions also supply a toolkit that takes into account market developments and provides flexibility for new products to be efficiently documented going forward.”

The 2011 Definitions were developed by four working groups of the 2011 Equity Definitions Drafting Committee, which comprises a global membership with representatives from both buy- and sell-side institutions. The Definitions are part of a new process and structure for documenting equity derivatives that will be implemented incrementally, initially via transaction matrices. In contrast to the 2002 ISDA Equity Derivatives Definitions, which were based upon a standard confirmation template for each of the three major transaction types (Swaps, Options, and Forwards), the 2011 Definitions confirmation structure is based upon a universal framework which is designed to support a unique set of core definitions.

Each transaction is a combination of unique terms, built on the same framework and may be documented, matched, and analyzed electronically. As next steps, market participants will create transaction matrices for US Index Variance Swaps and EU Index Variance Swaps by August 31. This will be followed by a review and plan of subsequent matrix products in October 2011.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to gain operational efficiency in corporate actions processing

While the risk associated with corporate actions is well established, many financial institutions continue with manual processing in the back office. More often than not, corporate actions information is manually keyed in and event processing lacks automation. This results in operational inefficiency, and financial risk due to missed events or simply getting it wrong. These...

BLOG

GLEIF and Open Ownership Collaborate on Beneficial Ownership Data to Fight Financial Crime

The Global LEI Foundation (GLEIF) and Open Ownership, provider of a beneficial ownership database funded by donors including government agencies, have collaborated to integrate Legal Entity Identifiers (LEIs) into Open Ownership datasets produced in line with the Beneficial Ownership Data Standard (BODS), an open standard providing guidance on collecting, sharing and using high-quality data on...

EVENT

RegTech Summit New York

Now in its 8th year, the RegTech Summit in New York will bring together the regtech ecosystem to explore how the North American capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Entity Data Management Handbook – Fourth Edition

Welcome to the fourth edition of A-Team Group’s Entity Data Management Handbook sponsored by entity data specialist Bureau van Dijk, a Moody’s Analytics company. As entity data takes a central role in business strategies dedicated to making the customer experience markedly better, this handbook delves into the detail of everything you need to do to...