Jurisdiction(s):
United Kingdom and Ireland

Key definition

ISDA definition

What does ISDA mean? In legal practice, “ISDA” refers to the International Swaps and derivatives Association, the global industry body for the over-the-counter (OTC) derivatives market. The term is not defined in legislation or case law; it is a descriptive label for the association and its standard derivatives documentation framework. ISDA publishes the ISDA Master Agreement (1992 and 2002 versions), the Credit Support Annex/Deed, Schedules, product Definitions (including the 2021 ISDA Interest Rate Derivatives Definitions and 2014 ISDA Credit Derivatives Definitions), and market Protocols (covering EMIR/UK EMIR compliance, margin, and IBOR fallbacks). This documentation is the market standard for OTC derivatives such as interest...

ISDA Credit Support: Concepts, Key Terms, Collateral Transfer Mechanics, Risks, and Regulatory Margin for Uncleared Derivatives

Published by a LexisNexis Banking & Finance expert

Practice notes

What is credit support?

Credit support allows a party to lessen the Credit risk of its Counterparty. It functions as a protective mechanism against non-performance. Such arrangements are also described as 'Financial collateral arrangements', 'margin arrangements', 'collateralisation' and 'credit enhancement'. One party (or both) will transfer, or otherwise make available, assets (termed collateral or margin) to the other party (the collateral taker) to secure or back its present or future obligations. If the credit support provider defaults, the collateral taker may rely on the collateral furnished by the defaulting party to secure any outstanding debt. Collateral might be posted by one party only (for example, where one party is rated more highly than the other, it may require collateral) or by both parties, as the particular arrangement requires. In this context, collateral denotes the assets delivered under a credit support arrangement. These are typically the following:

cash
securities

Cash collateral

The overwhelming majority of collateral is provided as cash, which for these purposes means rights to deposits. Following the decision in Re Charge Card Services, it used to be uncertain whether a chargor could create a security interest over a cash deposit where the cash is held with the collateral...

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Web page updated on 21/05/2026

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