The current financial crisis has exacerbated counterparty risk and raised to unprecedented heights the importance of collateral arrangements in over-the-counter derivatives. More than 85% of such arrangements are documented by a version of the International Swaps and Derivatives Association (ISDA) Credit Support Annex (CSA)1, and in most cases the negotiation of an ISDA Master Agreement is done simultaneously with the preparation of the related CSA2.

The CSA provides an elaborate framework for calculating exposure under derivatives transactions, posting and returning collateral, resolving disputes and various other issues.

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