International Swaps and Derivatives Association (ISDA)

International Swaps and Derivatives Association (ISDA) is a global trade association that develops and publishes standard documentation for over-the-counter (OTC) derivatives. ISDA's documentation is used in a wide variety of securitisation transactions, including:

Interest rate swaps: Interest rate swaps are used to hedge against interest rate risk. They are typically used in securitisations to lock in the interest rate on the underlying assets.
Credit default swaps: Credit default swaps are used to transfer credit risk. They are typically used in securitisations to protect the securitisation issuer from losses in the event of a default on the underlying assets.
Collateralized debt obligations (CDOs): CDOs are a type of securitisation that pools together a variety of different assets, such as loans, bonds, and other debt securities. ISDA's documentation is used to define the terms of the CDO and to govern the relationship between the different parties involved in the transaction.

ISDA's documentation is a valuable resource for market participants involved in securitisation transactions. It helps to ensure that transactions are structured in a consistent manner and that the rights and obligations of the different parties are clearly defined.

Here are some of the applications of ISDA's documentation in securitisation:

To reduce legal uncertainty: ISDA's documentation provides a standard set of terms and conditions that can be used in securitisation transactions. This helps to reduce legal uncertainty and to make it easier for market participants to understand their rights and obligations.
To promote market liquidity: ISDA's documentation is widely used in securitisation transactions. This helps to promote market liquidity and to make it easier for investors to buy and sell securitisation securities.
To reduce transaction costs: ISDA's documentation is typically less expensive than custom-drafted documentation. This can help to reduce transaction costs for market participants.