The ISDA Master Agreement 2002 is a widely-used contract in the world of financial derivatives. This agreement is a standard template that outlines the terms and conditions for parties entering into derivatives transactions. The ISDA Master Agreement has become an essential tool for banks and other financial institutions to standardize their derivatives business.

The structure of the ISDA Master Agreement is a combination of a standard framework and optional schedules. The standard framework outlines the general terms and provisions of the agreement, while the optional schedules are used to customize the agreement to the particular needs of the parties. The schedules can cover a range of topics, including the types of derivative products to be traded, the applicable governing law, and the credit support requirements.

One important aspect of the ISDA Master Agreement is the use of standard definitions. These definitions establish a common language for derivatives transactions and help to avoid misunderstandings between parties. The definitions cover a wide range of topics related to derivatives, such as payment calculations, events of default, and close-out amounts.

The ISDA Master Agreement 2002 is often used in conjunction with the credit support annex (CSA). The CSA sets out the collateral requirements for the parties to a derivatives transaction. The use of collateral helps to reduce counterparty credit risk and provides protection against the risk of default. The terms of the CSA are incorporated into the ISDA Master Agreement by reference.

The ISDA Master Agreement 2002 has been updated several times since its initial release. The most recent version, ISDA Master Agreement 2018, includes changes to the credit support provisions and other updates to reflect changes in market practice and regulation.

In summary, the ISDA Master Agreement 2002 is a standardized contract used to govern derivatives transactions. The agreement provides a common language and framework for parties to enter into derivatives contracts and helps to reduce counterparty credit risk. The use of collateral via the credit support annex is an important feature of the agreement. The agreement has been revised over time to reflect changes in market practice and regulation.