Collateral and the 1995 ISDA Credit Support Annex under English Law

Course Description

It is estimated that over two thirds of OTC derivatives transactions exposure is collateralised.  There has been a strong focus by the markets on counterparty credit risk since the global financial crisis.  There has also been an increased focus on how collateral is managed and a move away from over reliance on credit ratings due to some market scepticism about their accuracy.  Currently the market is adopting a “back to basics” approach and now is a good time to learn about it.

This one day course provides a description of the collateral market, a discussion of credit and legal issues and a clause by clause review of the 1995 ISDA® Credit Support Annex (“CSA”) under English law. The practical exercises at the end of this course allow delegates to apply and consolidate the knowledge gained throughout the day.

ISDA® is a registered trademark of the International Swaps and Derivatives Association, Inc. The programme is neither sponsored by nor affiliated with the International Swaps and Derivatives Association, Inc.

Course Outline

Download a copy of the sample course outline

One day course

1.The practicalities of taking collateral.

  • Why take it? 
  • Collateral types
  • Factors affecting choice of collateral.
  • Getting the collateral balance right.
  • Haircuts
  • Varying collateral
  • Controlling collateral
  • Operating procedures

2. Legal issues relating to collateral.

  • Capacity
  • Pledge and title transfer approaches
  • Recharacterisation risk
  • PRIMA
  • Governing law
  • Suspect periods
  • The European Directive on Financial Collateral Arrangements.

3. The ISDA® Credit Support Annex (English law).

  • Detailed analysis of provisions.
  • Commonly made amendments with examples. 

4. Other collateral documentation.  

5. Two case studies or a practical negotiation exercise.

Training is charged at an agreed daily rate plus Value Added Tax.

Delegates need to bring their own copies of the 1995 ISDA® Credit Support Annex under English Law.

Learning Objectives

Participants will take away with them the following:

  • Awareness of why collateral is taken and in what forms.
  • An in-depth understanding of the ISDA® Credit Support Annex under English law.
  • Knowledge of the common amendments negotiated in this Annex.
  • Acquaintance with the key legal issues for collateral.

 Who Should Attend

  • Collateral Managers
  • Derivatives Documentation Negotiators
  • Legal Counsel
  • Treasury Managers
  • Credit Risk Managers