Mastering the storm

The succession of credit events in September and October revealed that many investors did not know what to do in the event of a default of a counterparty. What recourse do parties have under the Isda master agreement? By Joshua Cohn and Jillian Ashley

The long, upwards float of the credit bubble means it has been years since the last spate of crisis close-outs in the capital markets. A whole generation of market personnel now finds itself facing the current crisis without direct experience of terminating transactions in disturbed market conditions. Many have been gaining experience in this previously unfamiliar realm through the lens of the various editions of International Swaps and Derivatives Association master agreements. In this article