Introduction to Interest Rate Swaps and Their Termination ...

Introduction to Interest Rate Swaps and Their Termination Under the 1992 Master Agreement By Prateek Shah, CPA and Michael Sadler, Executive Summary: The financial crisis of 2008 has resulted in Termination of a number of Swaps and derivatives transactions. As can be expected, the Termination payments for these transactions are facing increased scrutiny. This article provides legal practitioners an Introduction to Interest rate Swaps and uses Interest -rate Swaps as an example to discuss issues related to determining Termination payments. Although the International Swaps and Derivatives Association ( ISDA ) issued an updated version of its Master Agreement in 2002 (the 2002 Master Agreement ), this article focuses on Termination payments under the 1992 version of the ISDA Master Agreement (the 1992 Master Agreement ) as adoption of the 2002 Master Agreement has been slower than expected and the 1992 Master Agreement is still the governing contract for a large number of transactions.

An interest-rate swap is a swap in which the payments between the parties are determined based on specified interest rates and a notional amount of principal. The most common

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  Introduction, Rates, Interest, Swaps, Introduction to interest rate swaps

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