Collateral and the 1995 ISDA® Credit Support Annex under English Law

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One day course

Course Description

The latest ISDA® Margin Survey estimates 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 start of the 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 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 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.

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

Programme points

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

Course outline

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.

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.

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Testimonials

Useful and thought provoking

"Paul Harding gave documentation, legal and credit employees a one day seminar on the 1992 ISDA Master Agreement and ISDA Credit Support Documents. The presentations were straightforward and interactive and everybody learned a great deal about these subjects. The final case study was also useful and thought provoking."

North American bank