The 1998 Supplement to the 1991 ISDA Definitions is an update of certain sections of the 1991 ISDA Definitions, which many participants engaging in privately negotiated derivatives transactions incorporate into existing confirmations or other documents. The Supplement covers a greater number of currencies and rates than the 1991 ISDA Definitions, and updates certain floating rate options to reflect changes in the nature of quotations since 1991. The 1998 Supplement is intended for use in confirmations of individual transactions governed by agreements such as the 1992 ISDA Master Agreements.

In addition to the expanded floating rate options section, the Supplement introduces new sections on negative interest rates, options and cash settlement. The negative interest rates provisions, incorporate language from ISDA’s November 1995 Negative Interest Rate Memorandum and make the presumption that the negative interest rate method will apply to all transactions, excepting floors and certain FRAs already addressed in the 1991 Definitions, unless otherwise specified. The Options provisions address terms relevant to swaptions, and rights of optional early termination and break clauses, including calculating a cash settlement amount. The Supplement includes provisions for calculating a cash settlement amount and provides a number of alternative cash settlement methods, which reflect the variety of methods currently used in practice.