The Protocol is the result of the publication of the 2002 ISDA Master Agreement (2002 Agreement). The 2002 Agreement offers several new beneficial provisions as compared to the 1992 ISDA Master Agreements, including a single measure of damages provision, Close-out Amount, amendments to several of the Events of Default and Termination Events, including a new Termination Event, Force Majeure Event, a set-off provision, consolidated interest and compensation provisions and amended jurisdiction provisions.
Prior to publication of the 2002 Agreement, ISDA published
a number of definitional booklets and credit support documents. These
documents refer to terminology and provisions set forth in the 1992 ISDA
Master Agreements. The Protocol permits these various documents to be
amended to reflect the new terminology and provisions set forth in the
2002 Agreement. For an institution to amend all affected contracts to
incorporate these standard amendments would involve significant time and
expense if undertaken through bilateral negotiation between all counterparties.
ISDA is therefore sponsoring a multilateral amendment mechanism - the
Protocol.