Trust, Confidence, and Automation: The ISDA Master Agreement as a Smart Contract

Abstract

The International Swaps and Derivatives Association (ISDA) Master Agreement (MA) is the prevailing contract in the Over-the-Counter (OTC) derivatives market. Its efficacy derives from, inter alia, the network effect. As the OTC derivatives market expanded so did users of the MA. During and after the MA’s creation, the market underwent extensive deregulation and the standard-form agreement soon filled the lacuna left by retreating regulation. Its ubiquity in the market has created a level of trust and confidence, not only in the terms of the MA itself but between parties which may not have otherwise entered into a business relationship. With the impending introduction by ISDA of a smart contract version, this article investigates whether automation will harmonize or disrupt trust and confidence in the MA. ISDA, derivatives, standard-form, trust, confidence, smart legal contracts