A framework contract is required for derivatives trading, although the CSA is not a mandatory element of the global document. Since 1992, the framework contract has been used to define the conditions for trading derivatives and make them mandatory and enforceable. Your publisher, ISDA, is an international trade association for participants in futures, options and derivatives markets. Trading derivatives involves high risks. A derivative contract is a contract to buy or sell a number of shares of a stock, loan, index or other asset at a given time. The amount paid in advance represents a fraction of the value of the underlying asset. Meanwhile, the value of the contract varies with the price of the underlying. A credit carrier annex (CSA) is a document defining the conditions for the provision of guarantees by the parties in the context of derivatives transactions. It is one of the four parts of a standard contract or framework contract developed by the International Derivatives and Exchange Association (ISDA). A Credit Carrier Annex (CSA) is a legal document governing the credit carrier (guarantees) for derivative transactions. It is one of the four parties that form an ISDA framework contract, but are not mandatory.
It is possible to have an ISDA agreement without a CSA, but normally no CSA without ISDA. ISDA framework contracts are required between two parties who trade derivatives in an agreement traded or traded over-the-counter (OTC) and not through an established exchange. Most derivatives trading is done through private agreements….