Credit Support Annex
The Credit Support Annex Guide provides our users with a complete online resource relating to the Credit Support Annexes published by ISDA and used with the ISDA Master Agreements, including articles on the Credit Support Annexes and sample provisions used by market participants to modify, supplement or amend the Credit Support Annexes standard terms. The following section ("Credit Support Annex - An Introduction) discusses the background of the Credit Support Annexes in general.
Detailed discussions relating to individual sections of the Credit Support Annexes (by Paragrah number under the English law CSA) are organised in the 2nd section ('Credit Support Annexes Section by Section Guide'). Access to the rest of the Credit Support Annexes Guide, including articles on individual sections of the Credit Support Annexes are subject to an annual paid subscription (currently USD100 p.a.).
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Credit Support Annex - An Introduction
The credit support annex or commonly called “CSA” is one of the key documents of a derivatives transaction documented under the ISDA Master Agreement published by the International Swaps and Derivatives Association, Inc. (“ISDA”).
The credit support annex is an agreement used to manage counterparty credit risk and parties to a derivatives transaction use the credit support annex to provide for the posting of collateral to secure the performance of the parties under the ISDA Master Agreement. The credit support annex contains detailed (and complex) provisions relating to, inter alia:
(a) the calculation of the exposure of each parties;
(b) the posting and transfer of collateral; and
(c) the return of collateral.
Credit Support Annex Governing Law
ISDA published four credit support annexes governed by, respectively, New York law, Japanese law and English law. Parties wishing to manage the credit risk of the transactions under English law have the option of using a credit support annex or a credit support deed (we will use the term “credit support annex” in general in this article).
Parts and Paragraphs
Provisions in the Schedule to the ISDA Master Agreement are numbered as Parts whereas the in the CSA, the provisions are numbered as Paragraphs.
Parties to the ISDA Master Agreement may amend, supplement or make election in respect of the provisions in the CSA by specifying the amendments, supplements and elections in Paragraph 11 (English Law) or 13 (New York or Japanese Law).
Transfer and Security Interest
The New York law form of CSA is a “security interest” form where possession of the collateral is maintained by the transfer and subject to a security interest granted to the counterparty. The English law form of CSA is a “transfer” form where the collateral is transferred to the counterparty (or an escrow agent) absolutely subject to an agreement to retransfer equivalent securities and it is not intended to create a security interest.
Credit Support Annex Collateral
Parties to the credit support annex may agree that certain collateral may be used under the credit support annex including cash, bonds, structured notes and other collateral.
Preamble to the Credit Support Annex
Paragraph 1 Interpretation
Paragraph 2 Credit Support Obligations
Paragraph 3 Transfers Calculations and Exchanges
Paragraph 4 Dispute Resolution
Paragraph 5 Transfer of Title, No Security Interest, Distributions and Interest Amount
Paragraph 10 Definitions
Paragraph 11 Elections and Variables
Other Credit Support Annex Articles
- Credit Support Annex Comparison Table | ISDA Credit Support Annex Terminology |
Last updated August 2012^