Explanation:
The ISDA specifies the general terms of the agreement between parties with respect to general issues such as netting, collateral, the definition of default, and other termination events.
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Q.1876 The International Swaps and Derivatives Association (ISDA) plays a crucial role in the over-the-counter (OTC) derivatives market. It provides a framework for the parties involved in these transactions. Which of the following options accurately describes the primary function of the ISDA in the context of OTC derivatives transactions?
A
It defines the general terms between parties with respect to issues such as netting, collateral, definition of default, and conditions for termination of the agreement.
B
It defines the general terms between parties and specifies conditions that may lead to the termination of the contract.
C
It’s a single document for with which a counterparty can be sued in case of default.
D
It outlines conditions in which both parties can terminate the contract and move on with no loss or legal issues.