Why do you need an ISDA?
Beside this, what is the purpose of an ISDA?
(“ISDA”) which is used to provide certain legal and credit protection for parties who entered into over-the-counter or “OTC” derivatives. OTC derivatives are mainly used for hedging purposes.
Herein, do you need an ISDA to trade FX spot?
1. Clients need to sign an ISDA (International Swaps and Derivatives Agreement) with the bank. The client and the bank exchange their currencies with the agreed spot rate. At the maturity, they do the converse exchange at the predetermined forward rate.
Capital rules adopted by the Commodity Futures Trading Commission and U.S. bank regulators in 2015, which are being phased in over a five-year period, require that capital equivalent to five days the historical value-at-risk (HVaR) of a derivative such as an interest rate swap be posted to back trades that are