The International Swaps and Derivatives Association, Inc. (ISDA) announced today the launch of the ISDA 2013 Account Control Agreement (ISDA ACA).
The ISDA ACA facilitates the negotiation process of contractual arrangements that provide for segregation of Independent Amounts (IA) with a third party custodian. Similar to other tri-party account control agreements, the ISDA ACA is a three-way contract between the custodian and two over-the-counter (OTC) derivatives counterparties and provides that the custodian will hold and release IA to the counterparties based on pre-defined conditions.
The ISDA ACA has a similar structure to the ISDA Master Agreement. It aims to streamline tri-party custodial negotiations by offering a standardized agreement with an accompanying annex containing suggested optional provisions that can be tailored as appropriate.
Risks associated with IA and the recent regulatory responses to this issue have given rise to more frequent requests for segregation of IA in recent years. The ISDA ACA was developed by the ISDA Segregated IA Working Group (which includes swap dealers, buy-side firms and custodian firms) in response to new requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States. The ACA is available on the Collateral section of ISDA’s website.
