Jurisdiction(s):
United Kingdom

Key definition

Derivatives definition

What does Derivatives mean? Derivatives are contracts used to transfer or manage risk, whose value is determined by an underlying asset, interest rate, currency, index, commodity, security or credit event. Common types include futures, options, swaps (interest rate and currency), forwards and credit derivatives (such as credit default swaps), traded on exchanges or over the counter. Legally, derivatives create payment or delivery obligations calculated by reference to the underlying. They are typically documented under an ISDA Master Agreement with a Credit Support Annex for collateral, and depend on close-out netting upon default. Key issues include counterparty capacity and authority, governing law and jurisdiction,...

COVID-19 and derivatives: ISDA legal/documentation issues, market disruption and CCP margin management, plus regulatory responses (LIBOR transition and margin deferrals) and practical guidance

Published by a LexisNexis Banking & Finance expert

Practice notes

ARCHIVED: This Practice Note is archived and is no longer maintained.

Coronavirus (COVID-19)

Lawyers around the globe have been tackling shared concerns arising from the coronavirus (COVID-19) pandemic. A range of issues are especially pertinent to banking and finance practitioners. For deeper detail and commentary, see Practice Note: Coronavirus (COVID-19) implications for Banking & Finance lawyers, which is regularly updated with news, practical guidance and analysis on the impact of COVID-19 developments.

This Practice Note covers areas such as force majeure (which is not the same as the derivatives Force Majeure provisions) and the execution of documents, and explains the implications for various categories of banking and finance lawyers. It concentrates on the position of derivatives lawyers and the ways in which the COVID-19 pandemic has already affected the derivatives market, as well as the disruption expected to continue for the foreseeable future. It also identifies practical considerations and how derivatives practitioners ought to respond to the pandemic.

Which over-the-counter (OTC) derivatives are particularly likely to be affected by the pandemic?

Derivatives that involve payments calculated by reference to prices of assets traded on...

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Web page updated on 21/05/2026

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