Capital Markets Examiner School, Providence, RI

Client Derivative Documentation

 ISDA Master Agreement  Derivatives suitability documentation signed by customer  Resolutions authorizing execution of derivatives contracts  ACH authorization for payments  Swap confirmation

ISDA Documentation and Execution

 Any party to a swap must sign ISDA (International Swaps and Derivatives Association) documentation

 Standardized document that details both parties’ rights and obligations under any future swap transaction(s)

 ISDA documents create the legal framework for the swap transaction, and protects the lender in the event of default  The swap is a separate contract from the loan; the ISDA documents cross collateralize the swap and the loan

 ISDA documents give the borrower the ability, but not the requirement, to execute a swap  Best practice – borrower signs the ISDA documents prior to loan closing