Isda Islamic Master Agreement

The ISDA/IIFM Tahawwut Master Agreement is a global master`s agreement for transactions in Islamic derivatives. The document contains the first standard contractual document for cross-border transactions in Shariah-compliant derivatives. Like the ISDA Masteragrement 2002, on which it is based, the ISDA/IIFM Tahawwut Master Agreement is a multi-product framework agreement. The document was drafted with the aim of documenting the exchange of Islamic currencies and profits based on the murabaha of raw materials. Copies of the TMA CSD model (along with TMA and other TMA documentation) are available under www.isda.org and www.iifm.net. The term “rating and loss” is largely based on the concept of the 1992 ISDA executive contract (1992 agreement). In summary, Loss is the loss and cost (or profit) of the determining party under the terminated transaction or terminated DFT Terms Agreement. Unlike the 1992 agreement, Loss does not specifically refer, due to the requirements of the Shari`a, to the loss of negotiations, financing costs or losses or costs resulting from the termination, liquidation, obtaining or restoration of a security or related trading position. The market offer is an amount that, on the basis of quotes determined for an amount, is paid to the party or party that decides, in light of an agreement between that party and the organization; the offer to subscribe to a replacement transaction would be paid for the maintenance of the economic equivalent of a payment or delivery by the parties with respect to those payments and deliveries that would have been required after the early termination date, as well as all deliveries that have not been made for forward transactions or before the early termination date) or the economic equivalent with respect to terminated DFT terms (which would thus account for the value of designated future transactions).

The agreement introduces the concept of future designated transactions. These are either transactions on which the parties who make them at a later date, or transactions that one party concludes in accordance with a wa`ad to the other party with a view to proceeding later to the election of the other party. The agreement with these transactions is referred to as “DFT conditions.” Future designated transactions are confirmed by confirmation of DFT`s terms and conditions. Pending their transaction, designated future transactions are not transactions within the meaning of the agreement and are therefore treated differently from the transactions concluded (particularly with respect to closure). However, after the transaction, designated future transactions are transactions within the meaning of the agreement. The publication of the agreement is the culmination of years of work and discussions between ISDA, IIFM, market participants and consultants to conclude an agreement that complies with the requirements of the Shari`a, but at the same time in a form familiar to those operating in the derivatives markets. Allen -Overy LLP was instrumental in the development of the agreement.

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