The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

ISDA Publishes 2011 Equity Derivatives Definitions

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.

Related content

WEBINAR

Recorded Webinar: Data Standards – progress and case studies

Global data standards and identifiers are essential to business growth, market stability and cost reduction – but they can be challenging to implement, while a lack of consistency across jurisdictions has presented obstacles to global take-up. However, with regulators starting to sit up and take note, the issue of data standards is coming increasingly to...

BLOG

A-Team Group Introduces 2021 Innovation Awards

Here at A-Team Group we have been working hard on plans to celebrate innovative projects and teams with the launch of our A-Team Innovation Awards. The awards are designed to reward teams that have found innovative ways to make use of new and emerging technologies to solve challenges at financial institutions in capital markets. The...

EVENT

RegTech Summit Virtual

The RegTech Summit Virtual is a global online event that will be held in June 2021 with an exceptional guest speaker line up of RegTech practitioners, regulators, start-ups and solution providers to collaborate and discuss innovative and effective approaches for building a better regulatory environment.

GUIDE

MiFID II Handbook

As the 3 January 2018 compliance deadline for Markets in Financial Instruments Directive II (MiFID II) approaches, A-Team Group has pulled together everything you need to know about the regulation in a precise and concise handbook. The MiFID II Handbook, commissioned by Thomson Reuters, provides a guide to aspects of the regulation that will have...