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FRM Part II · FRM Exam Part II · Netting, Close-out and Related Aspects

Which element of the ISDA documentation architecture is used to customise the standard terms for a specific pair of counterparties, for example by electing additional termination events and cross-default thresholds?

The Schedule to the ISDA Master Agreement customises the standard terms for a counterparty pair. Parties use it to elect options and add or amend provisions such as additional termination events and cross-default thresholds, while confirmations only document individual trades.

  1. AThe Schedule to the Master AgreementCorrect
  2. BThe pre-printed Master Agreement body, which cannot be amended
  3. CThe trade Confirmation for each transaction only
  4. DThe ISDA definitions booklets for products

Explanation

The Schedule is where parties elect options and modify the pre-printed Master Agreement, including termination events and cross-default thresholds. Confirmations document individual trades, and product definitions supply standard terms for those trades rather than counterparty-specific legal provisions.

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