Opinions Overview

Netting and Collateral Opinions

A Master Agreement has established international contractual standards governing privately negotiated derivatives transactions that reduce legal uncertainty and allow for reduction of credit risk through netting of contractual obligations. Ensuring the enforceability of the netting provisions of the ISDA Master Agreement remains a key initiative for the Association.

The ISDA netting opinions address the enforceability of the termination, bilateral close-out netting and multibranch netting provisions of the 1992 and 2002 Master Agreements. In addition, ISDA has commissioned legal opinions on the enforceability of the ISDA Credit Support Documents in various jurisdictions. The opinions are generally updated on an annual basis.

Public Netting Documents

Benefits of Close-out Netting of Derivative Transactions – June 29, 2016

2006 ISDA Model Netting Act, Version 2 – October 10, 2007

Memorandum on the Implementation of the Model Netting Act – March 1, 2006

Client Clearing Opinions

  • Principal to Principal Model (P2P)

ISDA has addressed the enforceability of the close-out, set-off and default provisions of the ISDA/FIA Client Cleared OTC Derivatives Addendum (the “P2P Addendum”) when used in conjunction with the form of the Master Agreement. The P2P Addendum works in conjunction with an existing master agreement to facilitate the standardised documentation of client clearing and to support delivery of the client protections used by central counterparties on the default of a clearing member. The P2P Addendum operates on the principal-to-principal client clearing model and is designed to operate on a cross CCP basis in conjunction with any non-US CCP that adopts a client clearing structure capable of being used with the P2P Addendum.

ISDA opinions are produced either for reliance by a Clearing Member (CM) entering into a P2P Addendum with a Client located in a particular jurisdiction or for reliance by a Client entering into a P2P Addendum with a CM located in a particular jurisdiction.

  • CRR Article 305(2)(c)

ISDA has published a number of clearing related legal opinions to assist ISDA members to apply the risk weightings under CRR Article 305. One of the conditions to apply the reduced risk weightings under Article 305 is that the client of a clearing member has a legal opinion that it would bear “no losses” on account of the insolvency of its clearing member or any of the clearing member’s clients under the laws of the jurisdiction of various related entities. A modular architecture has been used to prepare these opinions.

CRR Article 305(2)(c) opinions – Note to ISDA members

CRR Article 305(2)(c) opinions status

  • US FCM Model

ISDA and FIA jointly commission and publish, for the benefit of their members, legal reviews addressing the enforceability of a US registered FCM’s close out and netting rights vis-à-vis its customers in various jurisdictions under the FIA-ISDA Cleared Derivatives Addendum. These legal reviews are based on assumptions regarding the content of the underlying futures and options agreement that is supplemented by the FIA-ISDA Cleared Derivatives Addendum between an FCM and a customer.

ISDA and FIA also commission and publish for the benefit of their members, legal reviews addressing the ability of customers to net against their respective FCMs when using the FIA-ISDA Cleared Derivatives Addendum and against three CCPs that support the FCM model of clearing (CME, ICE and LCH).

ISDA OPINIONS LIBRARY

The opinions are made available by ISDA to ISDA members as part of their membership and do not incur any additional charges.

Please note that each opinion will have various assumptions and qualifications relevant to the jurisdiction and analysis provided and therefore each opinion must be read in detail before relying on the conclusions reached within such opinions.

 

Jurisdiction Netting Collateral Addendum P2P CM Reliance Addendum P2P Client Reliance FCM Reliance
Anguilla
Yes
Yes
No
No
No
Australia
Yes
Yes
Yes
Commissioned
Yes
Austria
Yes
Yes
Yes
No
No
Bahamas
Yes
Yes
No
No
Yes
Barbados
Yes
Yes
No
No
No
Belgium
Yes
Yes
Yes
No
No
Bermuda
Yes
Yes
Yes
No
Yes
Brazil
Yes
Yes
No
No
Yes
British Virgin Islands
Yes
Yes
Yes
No
Yes
Canada
Yes
Yes
Yes
No
Yes
Cayman Islands
Yes
Yes
Yes
No
Yes
Channel Islands – Guernsey
Yes
Yes
Yes
No
Yes
Channel Islands – Jersey
Yes
Yes
Yes
No
Yes
Chile
Yes
Yes
No
No
No
Colombia
Yes
Yes
No
No
No
Curacao, Aruba, St Maarten
Yes
No
No
No
Yes
Cyprus
Yes
Yes
Commissioned
No
No
Czech Republic
Yes
Yes
Yes
No
No
Denmark
Yes
Yes
Yes
Yes
No
England & Wales
Yes
Yes
Yes
Yes
No
Finland
Yes
Yes
Yes
No
No
France
Yes
Yes
Yes
Yes
Yes
Germany
Yes
Yes
Yes
Yes
Yes
Greece
Yes
Yes
Yes
No
No
Hong Kong
Yes
Yes
Yes
Yes
Yes
Hungary
Yes
Yes
Yes
No
No
Iceland
Yes
Yes
No
No
No
India
Yes
Yes
Yes
No
No
Indonesia
Yes
Yes
Commissioned
No
No
Ireland
Yes
Yes
Yes
No
No
Israel
Yes
Yes
Yes
No
No
Italy
Yes
Yes
Yes
No
No
Japan
Yes
Yes
Yes
Commissioned
Yes
Liechtenstein
Yes
No
No
No
No
Luxembourg
Yes
Yes
Yes
No
Yes
Malaysia
Yes
Yes
Yes
No
No
Malta
Yes
Yes
No
No
No
Mauritius
Yes
No
No
No
No
Mexico
Yes
Yes
No
No
No
Netherlands
Yes
Yes
Yes
Yes
Yes
New Zealand
Yes
Yes
Yes
No
Yes
Norway
Yes
Yes
Yes
No
Yes
Peru
Yes
Yes
No
No
No
Philippines
Yes
Yes
Yes
No
No
Poland
Yes
Yes
Yes
No
No
Portugal
Yes
Yes
Yes
No
No
Romania
Yes
No
No
No
No
Russia
Yes
No
No
No
No
Scotland
Yes
Yes
Yes
Yes
No
Singapore
Yes
Yes
Yes
Yes
Yes
Slovakia
Yes
No
No
No
No
Slovenia
Yes
Commissioned
No
No
No
South Africa
Yes
Yes
Commissioned
No
No
South Korea
Yes
Yes
Yes
No
No
Spain
Yes
Yes
Yes
No
No
Sweden
Yes
Yes
Yes
Yes
No
Switzerland
Yes
Yes
Yes
Yes
No
Taiwan
Yes
Yes
Commissioned
No
No
Thailand
Yes
Yes
Yes
No
No
Turkey
Yes
Yes
Yes
No
No
UAE – Abu Dhabi Global Market (ADGM)
Yes
No
No
No
No
UAE (DIFC Free Zone)
Yes
No
No
No
No
USA
Yes
Yes
Commissioned
No
Yes