Documentation Of Isda Valid For Swaps

The Fixed Income, Money Markets and Derivatives Association (Fimmda) and Foreign Exchange Dealers Association of India (Fedai) have clarified that banks and other market participants can use the documentation provided by the International Swaps and Derivatives Association (Isda) for conducting interest rate swaps and forward rate agreements.

One of the issues cited by market participants as a stumbling block towards developing a deep and liquid rupee derivatives market was the fact that some of the legal issues were unclear and also because a standard form of documentation did not exist.

Speaking at a seminar here yesterday, Arvind Sethi, vice-chairman, Fimmda said that the association had issued a clarification to the effect that the Isda documentation could be used by counterparties conducting an interest rate swap or a forward rate agreement.

 

He also said that banks could use to English law rather than Indian law as a reference for the agreement. "We have taken legal opinion on the issue. The RBI also has not objected to the use of English law as a basis."