The ISDA Clearstream documents are used to document a collateral arrangement between two parties where the collateral is held in a Clearstream account for use in complying with initial margin requirements.

2019 Clearstream Documents

There are two versions of the 2019 Security Agreement, one designed for use where the Clearstream collateral account is in the name of the Security-provider and the other designed for use where the Clearstream collateral account is in the name of the Security-taker. The latter version should be used where parties wish to incorporate the Recommended Amendment Provisions for the ISDA 2017 Clearstream Security Agreement with respect to Japanese Collateral (“Shichiken”), which are provided as standalone documents and also included as an election, as they are intended for continued use with the 2019 versions of the Clearstream documents. The 2019 versions of these documents have been updated to reflect the changes made in the ISDA 2018 Credit Support Annex For Initial Margin (IM) (Security Interest – New York Law) and the 2018 Credit Support Deed For Initial Margin (IM) (Security Interest – English Law) published in September 2018. The governing law of the Collateral Transfer Agreement defaults to the governing law of the underlying ISDA Master Agreement. Parties using a French law governed ISDA Master Agreement should incorporate the ‘Recommended Amendment Provisions for ISDA Clearstream CTA for use with French law ISDA Master Agreement’, which is provided as a standalone document.

Annotated versions of the 2019 Clearstream Documents (Collateral Transfer Agreement and Security Agreements) are also included, setting out descriptions and explanations of the impact of each of the common elections that may be made in the documents. A User’s Guide to the 2018 & 2019 ISDA Regulatory Initial Margin Documentation, including the 2019 Clearstream Documents, is available here.

The Japanese Security Collateral Provider Provisions (IM) for the ISDA 2019 Clearstream Security Agreement enable parties to benefit from the protection for security interest collateral arrangements under the amendment to the Act on Close-Out Netting of Specified Financial Transactions Conducted by Financial Institutions (the “Netting Act”) which was enacted on 31 May 2019 and became effective on 1 May 2020 (the “Amendment”). Following the implementation of the Amendment, security interest collateral arrangements are now recognized and protected in the reorganization proceedings of a Japanese Pledgor (before such implementation, only title transfer collateral arrangements were covered by the Netting Act).

The SEC IM Supplement (Third Party Segregation) supplement is designed for use where a party is subject to SEC regulatory initial margin (IM) requirements, and the parties wish to segregate their SEC IM with an independent custodian. It relies on the segregation terms contained in the existing ISDA initial margin documents, and can be used with any of the following: 2018 IM CSA, 2018 IM CSD, 2019 Bank Custodian CTA, 2019 Clearstream CTA, and 2019 Euroclear CTA.  You can access this supplement here.

Note: ISDA has published “ISDA Supplemental Regime Definitions for Use with Regulatory Margin Collateral Documentation” related to certain Regimes that have come into force since publication of the ISDA Clearstream Collateral Transfer Agreement (2019), available here.

2016/2017 Clearstream Documents

The 2016 version of the Security Agreement is designed for use where the Clearstream collateral account is in the name of the Security-provider. The 2017 version of the Security Agreement is designed for use where the Clearstream collateral account is in the name of the Security-taker, and this version should be used where the parties intend to use the Recommended Amendment Provisions for Japanese Collateral (“Shichiken”). These may be used with either of the two versions of the Collateral Transfer Agreement.  The Novation Agreement was prepared to allow parties to move from the 2016 version of the Security Agreement to the 2017 version.