Cross Product Master Agreement Definition

- December 06, 2020

This brochure, intended to illustrate the known concerns of advocate associations, will help SIFMA members understand the requirements of antitrust legislation and minimize the risks of cartels and abuse of dominance related to SIFMA-sponsored activities. While cartel and abuse legislation recognizes that trade associations make many positive contributions to the U.S. economy, the mere fact that trade associations bring together competitors risks creating agreements that raise concerns about cartels and abuse of dominance. The mastery agreement is the central document around which the rest of the ISDA documentation structure is cultivated. The pre-printed framework contract is never amended, with the exception of the addition of the names of the parties, but is adapted to the master agreement by the use of the calendar, a document containing options, additions and changes to the framework contract. In 1987, ISDA established three documents: (i) a standard form control agreement for U.S. dollar interest rate swaps; (ii) a standard-master contract for multi-currency interest rate and exchange rate swaps (known as the “1987 ISDA Executive Contract”); and (iii) definitions of interest rates and currencies. The new cross product Master Agreement (“CPMA”) has just been published at a recent symposium of the Federal Reserve Bank of New York, accompanied by a calendar and guidelines. As outlined in the guidelines, CPMA was developed through the efforts of a group of financial market associations as an instrument for managing counterparty risk across different types of financial products and sectoral agreements that are widely used to achieve the objective of reducing financial risk. The framework contract is quite long and the negotiation process can be difficult, but once a framework contract is signed, the documentation of future transactions between parties will be reduced to a brief confirmation of the essential terms of the transaction. The ISDA Masteragrement, published by the International Swaps and Derivatives Association, is the most widely used master service contract for otC derivatives transactions internationally.

It is part of a documentary framework that aims to provide comprehensive and flexible documentation on OVER-the-counter derivatives. The framework consists of a master contract, a calendar, confirmations, definition brochures and credit support documentation. At the same time as the timetable, the framework agreement defines all the general conditions necessary for the proper distribution of the risks of transactions between the parties, but does not contain specific terms and conditions for a particular transaction.

Discussion