Netting and Collateral Opinions
The ISDA 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. ISDA has published netting opinions covering over 80 jurisdictions and collateral opinions covering over 60 jurisdictions. The opinions are generally updated on an annual basis. The status of such updates is available here.
ISDA has also published informal country updates for jurisdictions where it does not currently have a netting opinion. Such informal country updates are available here. An overview of all jurisdictions currently covered by either a netting opinion or informal country update can be found here.
IFI Opinions
As International Financial Institutions (IFIs) are different to the other counterparties covered by ISDA’s netting and collateral opinions, ISDA’s IFI opinions take a different approach and structure to ISDA’s netting and collateral opinions. The concern of the opinions is enforceability of the close-out netting provisions of the ISDA Master Agreement against an IFI by private parties in domestic courts, whether in terms of withstanding a challenge by an IFI to the effectiveness of a counterparty’s exercise of termination and netting rights or, if immunity is not a bar, by invoking judicial process against the IFI. Therefore, the IFI opinions are intended to provide analysis by reference to the domestic governing law of the ISDA Master Agreements and the domestic law of the jurisdiction where an IFI is based. To the extent that principles of public international law or IFI treaty terms provide the rule of decision to a domestic court, or are relevant as background facts in applying domestic legal rules, the opinions will make reference to such principles and terms.
Please find a brief presentation with additional information here.
Netting Resources
2018 ISDA Model Netting Act and Guide – October 15, 2018
Benefits of Close-out Netting of Derivative Transactions – June 29, 2016
E-contract Opinions
Contracts are increasingly being formed and executed electronically. Several countries around the globe, including the Middle Eastern and Asia-Pacific regions, have enacted legislation in the area of electronic commerce based on various types of UNCITRAL model provisions and treaties, e.g., the 2005 UN Convention on the Use of Electronic Communications in International Contracts, the 1996 UNCITRAL Model Law on Electronic Commerce and the 2001 Model Law on Electronic Signatures. These instruments include provisions relevant to financial contracts, including foreign exchange and securities transactions. ISDA’s e-contract opinions look at the enforceability of electronically executed and electronically confirmed contracts under the laws of various jurisdictions in the context of transactions under the ISDA Master Agreement which may be entered into by means of electronic data interchange or other means of electronic communication.
A copy of a webinar ISDA held on electronic execution in April 2020 in light of COVID-19 is available here.
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’s client clearing opinions are produced either for reliance by a clearing member 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).
aosphere Online Legal Services
aosphere is an online legal information business, offering subscription services which extract data from the ISDA netting, collateral and e-contract opinions, presenting them in an online “traffic light” colour coded report. Subscribers have unlimited access across their organisation.
netalytics, a joint venture with ISDA, analyses the information contained in ISDA’s netting opinions, extracts core information across all jurisdictions and presents it in an easy-to-read, standard format.
CSAnalytics helps firms to easily determine the most straightforward and effective way to take collateral from a counterparty, reducing the time and costs associated with this analysis.
diligence – ISDA e-contracts analyses the ISDA e-contract opinions to rapidly view the key factors relating to the use of electronic contracts, e-signatures and click-through agreements, including enforceability and admissibility.
aosphere also offer a ‘diligence’ product which analyses the capacity and authority of parties to enter into derivatives transactions as well as issues of governing law, submission to jurisdiction and required consents.
ISDA members can benefit from a free trial of these services plus multi-product discounts. Find out more here.
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. Please click here for a high level summary of the status of updates to ISDA’s netting, collateral and principal-to-principal clearing opinions in 2022.
| Jurisdiction | Netting | Collateral | Addendum P2P CM Reliance | Addendum P2P Client Reliance | FCM Reliance | E-contracts* | Core |
|---|---|---|---|---|---|---|---|
|
Andorra
|
Yes
|
No
|
No
|
No
|
No
|
No
|
No
|
|
Anguilla
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Yes
|
No
|
|
Argentina
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Armenia
|
Yes
|
Commissioned
|
No
|
No
|
No
|
Yes
|
No
|
|
Australia
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Austria
|
Yes
|
Yes
|
Yes
|
Commissioned
|
No
|
Yes
|
Yes
|
|
Bahamas
|
Yes
|
Yes
|
Commissioned
|
Commissioned
|
Yes
|
Yes
|
Pending
|
|
Bahrain
|
No
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
Barbados
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Belgium
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Bermuda
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Brazil
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Yes
|
Pending
|
|
British Virgin Islands
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Canada
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Yes
|
Pending
|
|
Canada – Quebec
|
Yes
|
Yes
|
No
|
No
|
No
|
No
|
No
|
|
Cayman Islands
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Channel Islands – Guernsey
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
Yes
|
|
Channel Islands – Jersey
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Chile
|
Yes
|
Yes
|
Commissioned
|
No
|
No
|
Yes
|
No
|
|
China
|
Yes
|
Yes
|
Yes
|
Commissioned
|
No
|
Yes
|
Yes
|
|
Colombia
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Costa Rica
|
Yes
|
Commissioned
|
No
|
No
|
No
|
No
|
No
|
|
Croatia
|
Yes
|
Yes
|
Commissioned
|
No
|
No
|
Yes
|
No
|
|
Curacao, Aruba, St Maarten
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
|
Cyprus
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
Yes
|
|
Czech Republic
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Denmark
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Egypt
|
No
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
England & Wales
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Finland
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Pending
|
|
France
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Georgia
|
Yes |
No
|
No
|
No
|
No
|
No
|
No
|
|
Germany
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes |
Pending
|
|
Ghana
|
No
|
No
|
No
|
No
|
No
|
Yes |
No
|
|
Gibraltar
|
Yes
|
No
|
No
|
No
|
No
|
No |
No
|
|
Greece
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Commissioned
|
Yes
|
|
Hong Kong
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Hungary
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Iceland
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
Yes
|
|
India
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Indonesia
|
Yes
|
Yes
|
No
|
No
|
No
|
No
|
No
|
|
Ireland
|
Yes
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Yes
|
|
Israel
|
Yes
|
Yes
|
Yes
|
No
|
Commissioned
|
Yes
|
Yes
|
|
Italy
|
Yes
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Pending
|
|
Japan
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Kazakhstan
|
Yes
|
No
|
No
|
No
|
No
|
No
|
No
|
|
Kazakhstan – AIFC
|
Yes
|
No
|
No
|
No
|
No
|
No
|
No
|
|
Kuwait
|
No
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
Latvia
|
Yes
|
Commissioned
|
No
|
No
|
No
|
Yes
|
No
|
|
Liechtenstein
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Lithuania
|
Yes
|
Commissioned
|
No
|
No
|
No
|
Yes
|
No
|
|
Luxembourg
|
Yes
|
Yes
|
Yes
|
Yes |
Yes
|
Yes
|
Yes
|
|
Malaysia
|
Yes
|
Yes
|
Yes
|
Commissioned
|
No
|
Yes
|
No
|
|
Malta
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Marshall Islands
|
Yes
|
No | No | No |
No
|
No
|
No
|
|
Mauritius
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Mexico
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
|
Netherlands
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
|
New Zealand
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
|
Nigeria
|
Yes
|
Commissioned
|
No
|
No
|
No
|
Yes
|
No
|
|
Norway
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Peru
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Philippines
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Pending
|
|
Poland
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes |
|
Portugal
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Qatar
|
No
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
Qatar (QFC)
|
Yes
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
Romania
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Russia
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
No
|
|
Saudi Arabia
|
No
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
Scotland
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Serbia
|
Yes
|
Yes
|
No
|
No |
No
|
Yes
|
No
|
|
Singapore
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Slovakia
|
Yes
|
No
|
No
|
No
|
No
|
Yes
|
Yes
|
|
Slovenia
|
Yes
|
Yes
|
Yes
|
No
|
No
|
Yes
|
Pending
|
|
South Africa
|
Yes
|
Yes
|
Yes
|
Commissioned
|
No
|
Yes
|
Pending
|
|
South Korea
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
Yes
|
|
Spain
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Yes
|
Pending
|
|
Sweden
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
Switzerland
|
Yes
|
Yes
|
Yes
|
Yes
|
Commissioned
|
Yes
|
Pending
|
|
Taiwan
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
Pending
|
|
Thailand
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Pending
|
|
Turkey
|
Yes
|
Yes
|
Yes
|
Yes
|
No
|
Yes
|
Yes
|
|
UAE (ADGM)
|
Yes
|
Yes
|
Yes
|
No
|
No
|
No
|
No
|
|
UAE (DIFC Free Zone)
|
Yes
|
Commissioned
|
No
|
No
|
No
|
No
|
No
|
|
UAE (Federal)
|
Yes
|
No
|
No
|
No
|
No
|
Yes
|
No
|
|
USA
|
Yes
|
Yes
|
No
|
No
|
Yes
|
Yes
|
Pending
|