CDP Documentation & Clearing Infrastructure

Question 1

Which document establishes the master terms and conditions governing all OTC derivatives transactions between two counterparties?

Accepted Answer

ISDA Master Agreement

Answer

FIA Master Agreement

Answer

GMRA Master Agreement

Answer

ICMA Framework Agreement

Question 2

Which of the following is NOT a standard component of a typical ISDA documentation package?

Accepted Answer

Exchange Membership Agreement

Answer

ISDA Master Agreement

Answer

Schedule to the Master Agreement

Answer

Trade Confirmation

Question 3

Under an ISDA Master Agreement, 'close-out netting' upon a counterparty default allows the non-defaulting party to:

Accepted Answer

Net all outstanding transactions to a single payment obligation

Answer

Net only trades executed on the same business day

Answer

Net only trades denominated in the same currency

Answer

Net trades only with prior written consent from both parties

Question 4

A 'Confirmation' in OTC derivatives documentation primarily serves to:

Accepted Answer

Document the specific economic terms of each individual trade

Answer

Replace the ISDA Master Agreement for large notional transactions

Answer

Establish the credit limit for a new counterparty relationship

Answer

Confirm that a trade has been submitted to a trade repository

Question 5

The 'Schedule' to an ISDA Master Agreement primarily serves to:

Accepted Answer

Elect and modify standard provisions of the Master Agreement

Answer

List all completed transactions in chronological order

Answer

Describe the collateral held by a custodian for each party

Answer

Enumerate all required regulatory filings for each trade

Question 6

Section 5 of the ISDA Master Agreement addresses which critical topic?

Accepted Answer

Events of Default and Termination Events

Answer

Payment obligations and delivery

Answer

Tax representations and indemnities

Answer

Multibranch party elections

Question 7

Under 'full two-way payment' upon close-out of an ISDA Master Agreement, which of the following is true?

Accepted Answer

Both parties pay or receive based on market values regardless of which party defaulted

Answer

Only the non-defaulting party is entitled to receive any close-out payment

Answer

Payments are split equally between the defaulting and non-defaulting parties

Answer

The defaulting party forfeits all in-the-money positions automatically