A&O eyes derivatives

City firm Allen & Overy has helped to relaunch two key documents on which the derivatives markets rely - the International Swaps and Derivatives Association's (ISDA) 2002 master agreement, and ISDA's equity derivatives definitions.

A&O has acted for two years as legal draftsman on the documents for ISDA, the global trade association which represents leaders in the derivatives industry.

The master agreement - published in 1987 and updated in 1992 - is the contractual basis for around 90% of the global derivatives market, which has an estimated notional value of $128 trillion (80 trillion).

New aspects of the master agreement, republished last week, include a means of valuing transactions, a force majeure termination clause, and set-off provisions, enabling parties to garner assets as well as money from defaulters.

The new equities definitions include provisions to cater for derivatives contracts where the underlying equities change as a result of mergers.

Jeffrey Golden, co-head of A&O's US law and derivatives practice groups in London, who worked on the master agreement, said: 'Working as ISDA's drafting counsel is a unique process, involving as it does the input of hundreds of lawyers and others from around the world, and taking into account global market practice and local law issues.'

The A&O team advising ISDA on the master agreement was led by New York partner Dan Cunningham, and the definitions team by London-based partner Thomas Jones.

LINKS: www.isda.org

Jeremy Fleming