# What Are the Key Differences between the 1992 and 2002 ISDA Master Agreements regarding Termination? ▴ Question

**Published:** 2025-07-30
**Categories:** Question

---

![Angularly connected segments portray distinct liquidity pools and RFQ protocols. A speckled grey section highlights granular market microstructure and aggregated inquiry complexities for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-efficiency.jpg)

![Abstract geometric design illustrating a central RFQ aggregation hub for institutional digital asset derivatives. Radiating lines symbolize high-fidelity execution via smart order routing across dark pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-high-fidelity-execution-architecture.jpg)

## Concept

The transition from the 1992 to the [2002 ISDA Master Agreement](https://prime.greeks.live/area/2002-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) represents a fundamental re-architecting of the core [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) engine governing the global derivatives market. This was an evolution driven by the hard lessons of market crises, where the operational ambiguities of the earlier framework were found to be sources of systemic vulnerability. The 2002 Agreement is the system’s response. It replaces procedural ambiguity with a more demanding, unified protocol.

The central design objective was to engineer a more robust and predictable close-out mechanism, moving the system’s center of gravity from subjective, and at times contentious, party-determined valuations to a more objective and transparent standard of commercial reasonableness. This shift directly addresses the critical failure points observed during the market stresses of the late 1990s, where the latitude afforded by the 1992 version could amplify uncertainty and disputes at the precise moment when market participants required absolute clarity.

Understanding the differences between these two foundational documents is to understand the maturation of [counterparty risk management](https://prime.greeks.live/area/counterparty-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The 1992 Agreement provided a flexible, but fragmented, toolkit. Upon termination, parties were faced with a choice between two distinct valuation methodologies, [Market Quotation](https://prime.greeks.live/area/market-quotation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and Loss, each with its own procedural pathways and evidentiary burdens. This optionality, while appearing to offer tailored solutions, created inherent inconsistencies and potential for strategic gamesmanship during a default scenario.

The 2002 Agreement collapses these choices into a single, consolidated mechanism ▴ the [Close-out Amount](https://prime.greeks.live/area/close-out-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This unification is the principal design change, creating a standardized process that, while more prescriptive for the [calculating party](https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), was intended to produce outcomes that were more defensible, consistent, and aligned with objective market realities. It is a direct reflection of a market demanding higher fidelity in its core operating system.

> The 2002 ISDA supplanted the 1992 version’s elective valuation methods with a single, more rigorous Close-out Amount standard to increase transparency and reduce disputes.

This architectural overhaul extended beyond the central valuation mechanism. The 2002 framework integrated new risk modules directly into the standard protocol. It introduced a [Force Majeure](https://prime.greeks.live/area/force-majeure/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) [Termination Event](https://prime.greeks.live/area/termination-event/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), a direct acknowledgment that market-disrupting events could extend beyond the traditional spheres of illegality or counterparty default.

Furthermore, it standardized a [set-off provision](https://prime.greeks.live/area/set-off-provision/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), elevating a critical credit risk mitigation tool from a frequent but optional schedule amendment to a core component of the agreement itself. Each modification within the 2002 version can be viewed as a patch designed to fortify the system, reduce legal uncertainty, and create a more resilient infrastructure for the immense and complex market it governs.

![An abstract visual depicts a central intelligent execution hub, symbolizing the core of a Principal's operational framework. Two intersecting planes represent multi-leg spread strategies and cross-asset liquidity pools, enabling private quotation and aggregated inquiry for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-for-institutional-digital-asset-derivatives.jpg)

![A symmetrical, high-tech digital infrastructure depicts an institutional-grade RFQ execution hub. Luminous conduits represent aggregated liquidity for digital asset derivatives, enabling high-fidelity execution and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-system.jpg)

## Strategy

The strategic impetus for the development of the 2002 [ISDA Master Agreement](https://prime.greeks.live/area/isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) was a direct response to the systemic fragilities exposed by major financial crises, most notably the 1998 collapse of Long-Term Capital Management ([LTCM](https://prime.greeks.live/area/ltcm/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)). The subsequent market turmoil revealed that the operational flexibility of the 1992 Agreement could become a liability under stress. The existing termination framework, with its divergent and often subjective valuation paths, proved inadequate for managing large-scale, simultaneous defaults.

The strategy behind the 2002 version was, therefore, one of systemic hardening. The goal was to de-risk the close-out process by replacing subjective interpretation with objective procedure, thereby enhancing legal certainty and market stability.

![An Institutional Grade RFQ Engine core for Digital Asset Derivatives. This Prime RFQ Intelligence Layer ensures High-Fidelity Execution, driving Optimal Price Discovery and Atomic Settlement for Aggregated Inquiries](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-high-fidelity.jpg)

## Redefining the Valuation Calculus

A core strategic decision was the elimination of the dual valuation methods offered in the 1992 Agreement ▴ Market Quotation and Loss ▴ and their replacement with the unified “Close-out Amount.” The 1992 framework’s choice created strategic complexity. Market Quotation was intended to be an objective measure based on obtaining quotes from leading dealers, but it often proved impractical in illiquid or stressed markets where such quotes were unavailable. Loss, conversely, was a more subjective measure of a party’s total losses and costs, which provided flexibility but opened the door to disputes over the reasonableness of the determination. The 2002 Agreement’s Close-out Amount synthesizes these concepts into a single, more demanding standard.

It requires the calculating party to act in good faith and use “[commercially reasonable procedures](https://prime.greeks.live/area/commercially-reasonable-procedures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in order to produce a [commercially reasonable result](https://prime.greeks.live/question/how-do-courts-interpret-commercially-reasonable-procedures-in-close-out-amount-calculations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).” This dual-pronged requirement for both the process and the outcome fundamentally alters the strategic calculus. It places a higher evidentiary burden on the non-defaulting party, compelling a more transparent and defensible valuation process that can withstand objective scrutiny.

![Abstract geometric forms depict a Prime RFQ for institutional digital asset derivatives. A central RFQ engine drives block trades and price discovery with high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimizing-market-microstructure-for-high-fidelity-execution.jpg)

## What Was the Strategic Flaw of Optional Payment Methods?

The 1992 ISDA contained a structural anomaly known as the “First Method” of payment, which permitted a one-way payment obligation. Under this method, upon termination due to a default, only the [non-defaulting party](https://prime.greeks.live/area/non-defaulting-party/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) could receive a payment if the net value of all transactions was in its favor. If the net value favored the [defaulting party](https://prime.greeks.live/question/how-does-the-ccp-default-waterfall-protect-non-defaulting-members/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), the non-defaulting party was not required to pay. While market practice had already shifted decisively toward the “Second Method” (which required a two-way payment regardless of fault), the continued existence of the First Method in the 1992 document represented a significant source of legal and credit risk.

Its removal in the 2002 Agreement was a critical strategic move to align the [master agreement](https://prime.greeks.live/question/what-are-the-key-differences-between-a-prime-brokerage-agreement-and-an-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) with established market consensus and insolvency law principles in many jurisdictions, which favor the netting of all obligations. Mandating [two-way payments](https://prime.greeks.live/area/two-way-payments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) ensures a more equitable outcome and simplifies the credit analysis of counterparty exposure.

> By mandating two-way payments and a single Close-out Amount, the 2002 ISDA strategically eliminated legal uncertainties and aligned the framework with market best practices.

![A translucent teal dome, brimming with luminous particles, symbolizes a dynamic liquidity pool within an RFQ protocol. Precisely mounted metallic hardware signifies high-fidelity execution and the core intelligence layer for institutional digital asset derivatives, underpinned by granular market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core-intelligence-layer.jpg)

## Integrating New Risk Management Protocols

The [2002 ISDA](https://prime.greeks.live/area/2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) also expanded the strategic toolkit for managing extraordinary events by introducing Force Majeure as a standard Termination Event. The 1992 Agreement primarily dealt with illegality and tax-related events. The introduction of Force Majeure acknowledged that events beyond the control of the parties, such as natural disasters or terrorist attacks (a pointed concern after September 11, 2001), could make performance impossible. This provision provides a structured mechanism for terminating affected transactions when performance becomes impossible, preventing a scenario from automatically triggering a more punitive Event of Default.

Another strategic enhancement was the inclusion of a default set-off provision within the main body of the agreement. In the 1992 version, set-off rights were typically added in the Schedule. By making this a standard part of the architecture, the 2002 Agreement strengthens the credit protections available to the non-defaulting party, allowing it to set off any termination payment it owes against other amounts owed by the defaulting party outside of the ISDA relationship. This enhances the utility of the agreement as a comprehensive counterparty risk management tool.

![A sophisticated system's core component, representing an Execution Management System, drives a precise, luminous RFQ protocol beam. This beam navigates between balanced spheres symbolizing counterparties and intricate market microstructure, facilitating institutional digital asset derivatives trading, optimizing price discovery, and ensuring high-fidelity execution within a prime brokerage framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-10.jpg)

![A metallic disc intersected by a dark bar, over a teal circuit board. This visualizes Institutional Liquidity Pool access via RFQ Protocol, enabling Block Trade Execution of Digital Asset Options with High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-principal-operational-framework-market-microstructure-high-fidelity-execution.jpg)

## Execution

The execution of termination procedures under the ISDA Master Agreements reveals the practical consequences of their architectural differences. The shift from the 1992 to the 2002 framework is a move from a system of elective procedures to one of prescribed, unified standards. This has profound operational impacts on the calculating party, dictating the precise steps, evidence, and standards required to effect a valid close-out.

![An exposed institutional digital asset derivatives engine reveals its market microstructure. The polished disc represents a liquidity pool for price discovery](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-execution-system.jpg)

## How Does the Close out Amount Redefine the Burden of Proof?

The core operational challenge in executing a termination is the calculation of the final payment amount. The 2002 ISDA’s “Close-out Amount” imposes a significantly more rigorous [procedural burden](https://prime.greeks.live/question/what-is-the-procedural-impact-of-market-disruption-on-the-timing-of-a-close-out-valuation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) than either of the 1992 ISDA’s options. The 1992 “Loss” standard was largely subjective, requiring a party to determine its losses in “good faith,” a standard that English courts interpreted as a test of rationality (the so-called “Wednesbury” test). A determination could only be challenged if it was one that no reasonable party could have reached.

In contrast, the 2002 standard of “[commercially reasonable](https://prime.greeks.live/area/commercially-reasonable/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) procedures” and a “commercially reasonable result” introduces an objective benchmark. A non-defaulting party must now be prepared to demonstrate that its methodology and the final figure would be considered reasonable by an objective third party.

This operationalizes as a need for meticulous record-keeping and a clear, auditable valuation methodology. The calculating party must be able to produce evidence of the [market data](https://prime.greeks.live/area/market-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), models, and inputs used, and justify why those choices were commercially reasonable at the time of the calculation.

![Visualizing a complex Institutional RFQ ecosystem, angular forms represent multi-leg spread execution pathways and dark liquidity integration. A sharp, precise point symbolizes high-fidelity execution for digital asset derivatives, highlighting atomic settlement within a Prime RFQ framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-1.jpg)

## Valuation Methodologies an Operational Comparison

The following table breaks down the operational characteristics of the valuation methodologies across the two agreements.

| Feature | 1992 Agreement (Market Quotation) | 1992 Agreement (Loss) | 2002 Agreement (Close-out Amount) |
| --- | --- | --- | --- |
| Core Principle | Objective valuation based on external market data. | Subjective assessment of the non-defaulting party’s total losses and costs. | Hybrid method requiring objective, commercially reasonable procedures and result. |
| Calculation Standard | Based on quotes from at least three leading market makers for replacement transactions. | “Reasonably determines in good faith.” A test of rationality. | “Use commercially reasonable procedures in order to produce a commercially reasonable result.” An objective test. |
| Procedural Burden | High procedural burden to obtain multiple, valid dealer quotes. Often fails in illiquid markets. | Low initial procedural burden, but high potential for disputes over the “reasonableness” of the determination. | High procedural burden to document methodology, inputs, and justify commercial reasonableness of both process and outcome. |
| Required Inputs | Actual quotes from reference market-makers for transactions with the same remaining term. | Any information the calculating party deems relevant to its total losses, including replacement transaction costs, funding costs, and hedging costs. | Internally consistent methodologies, quotes, market data, and information from third-party sources. The use of internal models is permitted if commercially reasonable. |
| Potential For Dispute | High, especially concerning the availability and validity of quotes in a stressed market. | Very high, centered on the subjective nature of the “reasonable” determination. | Moderate, but shifts the focus of the dispute to the objective commercial reasonableness of the process. |

![A large, smooth sphere, a textured metallic sphere, and a smaller, swirling sphere rest on an angular, dark, reflective surface. This visualizes a principal liquidity pool, complex structured product, and dynamic volatility surface, representing high-fidelity execution within an institutional digital asset derivatives market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-optimized-market-microstructure-precision.jpg)

## Procedural Walkthrough for 2002 Close out Amount Calculation

A non-defaulting party executing a termination under the 2002 ISDA must follow a disciplined process:

- **Designation of [Early Termination Date](https://prime.greeks.live/area/early-termination-date/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ The non-defaulting party must issue a notice to the defaulting party specifying the Event of Default and designating an Early Termination Date.

- **Selection of Valuation Method** ▴ The party must select a calculation methodology. This can include obtaining quotes from third parties, using internal pricing models, or considering relevant market data. The key is that the chosen procedure must be commercially reasonable.

- **Gathering Information** ▴ The calculating party should gather all relevant information as of or shortly after the Early Termination Date. This could include dealer quotes, data from electronic trading platforms, and outputs from internal models. All information sources should be documented.

- **Performing the Calculation** ▴ The party calculates the value of all terminated transactions. The 2002 ISDA permits the use of various information types, including “any other information which it considers relevant.” The result must be a single net figure, the Close-out Amount.

- **Demonstrating Reasonableness** ▴ The party must be able to justify its result as commercially reasonable. This means the final amount should reflect what a rational market participant would view as the fair replacement cost of the terminated portfolio.

- **Issuing the Close-out Statement** ▴ A statement must be provided to the defaulting party showing the calculation in reasonable detail.

![A robust metallic framework supports a teal half-sphere, symbolizing an institutional grade digital asset derivative or block trade processed within a Prime RFQ environment. This abstract view highlights the intricate market microstructure and high-fidelity execution of an RFQ protocol, ensuring capital efficiency and minimizing slippage through precise system interaction](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-protocol-execution-engine.jpg)

## Key Clause Modifications an Operational View

The operational impact of the changes extends beyond valuation. The 2002 ISDA refines several other clauses that affect the execution of a termination.

| Provision | 1992 ISDA | 2002 ISDA | Operational Impact |
| --- | --- | --- | --- |
| Grace Periods | Three Local Business Days for a Failure to Pay or Deliver. | One Local Business Day for a Failure to Pay or Deliver after notice. | Accelerates the timeline for declaring a default, requiring more vigilant monitoring of payments and deliveries. |
| Force Majeure Event | Not included as a standard Termination Event. | Included as a Termination Event. After a waiting period, either party can terminate affected transactions. | Provides a clear operational path for unwinding transactions frustrated by external events without triggering a default. |
| Set-off | Not included as a standard provision. Must be added to the Schedule. | Included as a standard provision (Section 6(f)). | Streamlines the process for mitigating credit risk by providing an automatic right of set-off for the non-defaulting party. |
| Default Interest | Calculated at the payee’s cost of funding for all late payments. | Uses a different rate (Applicable Close-out Rate) if the payor is the non-defaulting party. | Prevents the punitive outcome where a non-defaulting party has to pay a high default interest rate to a defaulting counterparty. |

![Intersecting digital architecture with glowing conduits symbolizes Principal's operational framework. An RFQ engine ensures high-fidelity execution of Institutional Digital Asset Derivatives, facilitating block trades, multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-derivatives-rfq-engine-high-fidelity-execution.jpg)

## References

- Mayer Brown. “ISDA Master Agreement Close-out Provisions ▴ English Courts Highlight a Difference Between the 1992 and 2002 Versions.” 4 May 2018.

- Charles Law PLLC. “The ISDA Master Agreement ▴ Part II ▴ Negotiated Provisions.”

- Contemplates, J. “ISDA Comparison.” The Jolly Contrarian, 24 September 2020.

- International Comparative Legal Guides. “Derivatives Laws and Regulations ▴ Close-out Under the 1992 and 2002 ISDA Master Agreements 2025.” ICLG.com, 17 June 2025.

- Practical Law. “Comparison of 1992 and 2002 ISDA® Master Agreements.” Thomson Reuters.

- Wood, Philip. The Law and Practice of International Finance. Sweet & Maxwell, 2008.

- International Swaps and Derivatives Association. User’s Guide to the 2002 ISDA Master Agreement. ISDA, 2003.

![Intricate circuit boards and a precision metallic component depict the core technological infrastructure for Institutional Digital Asset Derivatives trading. This embodies high-fidelity execution and atomic settlement through sophisticated market microstructure, facilitating RFQ protocols for private quotation and block trade liquidity within a Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/08/institutional-crypto-derivatives-execution-system-microstructure.jpg)

## Reflection

The migration from the 1992 to the 2002 ISDA framework serves as a critical case study in financial market evolution. It demonstrates a system learning from stress and redesigning its core components to prioritize resilience and transparency over procedural flexibility. For any institution operating in the derivatives space, the principles embedded within the 2002 Agreement are foundational. Reflecting on these changes prompts a necessary question for any senior risk manager or legal counsel ▴ Does our internal operational framework for managing counterparty default fully align with the standards of objectivity and procedural rigor demanded by the modern market architecture?

The agreement itself is only one part of the system. The true measure of its effectiveness lies in the internal systems, models, and documented procedures that a firm can deploy in a crisis. The knowledge gained from analyzing these documents should be seen as an input into a larger, dynamic system of institutional intelligence, one that continuously refines its response protocols to ensure that in moments of extreme market stress, action is governed by clear, defensible, and robust processes.

![A transparent, multi-faceted component, indicative of an RFQ engine's intricate market microstructure logic, emerges from complex FIX Protocol connectivity. Its sharp edges signify high-fidelity execution and price discovery precision for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-best-execution.jpg)

## Glossary

<a href="https://prime.greeks.live/area/2002-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, domed institutional-grade interface with glowing green and blue indicators highlights active RFQ protocols and price discovery. This signifies high-fidelity execution within a Prime RFQ for digital asset derivatives, ensuring real-time liquidity and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-prime-os-execution-interface.jpg)

## 2002 Isda Master Agreement

Meaning ▴ The 2002 ISDA Master Agreement represents a standardized bilateral contractual framework for over-the-counter (OTC) derivatives transactions. </a><a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A macro view reveals a robust metallic component, signifying a critical interface within a Prime RFQ. This secure mechanism facilitates precise RFQ protocol execution, enabling atomic settlement for institutional-grade digital asset derivatives, embodying high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/core-secure-institutional-digital-asset-derivatives-rfq-trade-system-element.jpg)

## Risk Management

Meaning ▴ Risk Management is the systematic process of identifying, assessing, and mitigating potential financial exposures and operational vulnerabilities within an institutional trading framework. </a><a href="https://prime.greeks.live/area/counterparty-risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A focused view of a robust, beige cylindrical component with a dark blue internal aperture, symbolizing a high-fidelity execution channel. This element represents the core of an RFQ protocol system, enabling bespoke liquidity for Bitcoin Options and Ethereum Futures, minimizing slippage and information leakage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-engine-core-precision-component.jpg)

## Counterparty Risk Management

Meaning ▴ Counterparty Risk Management refers to the systematic process of identifying, assessing, monitoring, and mitigating the credit risk arising from a counterparty's potential failure to fulfill its contractual obligations. </a><a href="https://prime.greeks.live/area/market-quotation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Brushed metallic and colored modular components represent an institutional-grade Prime RFQ facilitating RFQ protocols for digital asset derivatives. The precise engineering signifies high-fidelity execution, atomic settlement, and capital efficiency within a sophisticated market microstructure for multi-leg spread trading](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-system.jpg)

## Market Quotation

Meaning ▴ A market quotation represents the current executable bid and ask prices for a specific financial instrument, typically accompanied by the corresponding tradable sizes or market depth at various price levels. </a><a href="https://prime.greeks.live/question/what-is-the-process-for-a-multi-party-rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Polished concentric metallic and glass components represent an advanced Prime RFQ for institutional digital asset derivatives. It visualizes high-fidelity execution, price discovery, and order book dynamics within market microstructure, enabling efficient RFQ protocols for block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-prime-os-precision.jpg)

## Calculating Party

A multi-party RFQ is a controlled protocol for sourcing competitive, off-book liquidity while mitigating information leakage. </a><a href="https://prime.greeks.live/area/close-out-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A macro view reveals the intricate mechanical core of an institutional-grade system, symbolizing the market microstructure of digital asset derivatives trading. Interlocking components and a precision gear suggest high-fidelity execution and algorithmic trading within an RFQ protocol framework, enabling price discovery and liquidity aggregation for multi-leg spreads on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-precision-engine.jpg)

## Close-Out Amount

Meaning ▴ The Close-Out Amount represents the definitive financial value required to terminate a derivatives contract or position, typically calculated upon a default event or a pre-defined termination trigger. </a><a href="https://prime.greeks.live/area/termination-event/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting angular structures symbolize dynamic market microstructure, multi-leg spread strategies. Translucent spheres represent institutional liquidity blocks, digital asset derivatives, precisely balanced](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-4.jpg)

## Termination Event

Meaning ▴ A Termination Event denotes a pre-specified condition or set of criteria, contractually defined or algorithmically encoded, whose verified occurrence mandates the immediate cessation or unwinding of a financial agreement, especially prevalent within institutional digital asset derivatives. </a><a href="https://prime.greeks.live/area/force-majeure/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, pointed object, merging light and dark modular components, embodies advanced market microstructure for digital asset derivatives. Its precise form represents high-fidelity execution, price discovery via RFQ protocols, emphasizing capital efficiency, institutional grade alpha generation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-rfq-execution-system-microstructure.jpg)

## Force Majeure

Meaning ▴ Force Majeure designates a contractual clause excusing parties from fulfilling their obligations due to extraordinary events beyond their reasonable control, such as natural disasters, acts of war, or government prohibitions, which render performance impossible or commercially impracticable. </a><a href="https://prime.greeks.live/area/set-off-provision/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A polished metallic needle, crowned with a faceted blue gem, precisely inserted into the central spindle of a reflective digital storage platter. This visually represents the high-fidelity execution of institutional digital asset derivatives via RFQ protocols, enabling atomic settlement and liquidity aggregation through a sophisticated Prime RFQ intelligence layer for optimal price discovery and alpha generation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimization-for-high-fidelity-execution-and-liquidity-aggregation-via-prime-os-intelligence-layer.jpg)

## Set-Off Provision

Meaning ▴ A Set-Off Provision constitutes a contractual or statutory right allowing a party to net mutual debts or claims owed to and by another party, thereby reducing the aggregate gross exposure to a single net amount. </a><a href="https://prime.greeks.live/area/isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Close-up reveals robust metallic components of an institutional-grade execution management system. Precision-engineered surfaces and central pivot signify high-fidelity execution for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-precision-optimizing-market-microstructure-for-best-execution-and-prime-os.jpg)

## Isda Master Agreement

Meaning ▴ The ISDA Master Agreement is a standardized contractual framework for privately negotiated over-the-counter (OTC) derivatives transactions, establishing common terms for a wide array of financial instruments. </a><a href="https://prime.greeks.live/area/ltcm/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A transparent cylinder containing a white sphere floats between two curved structures, each featuring a glowing teal line. This depicts institutional-grade RFQ protocols driving high-fidelity execution of digital asset derivatives, facilitating private quotation and liquidity aggregation through a Prime RFQ for optimal block trade atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-6.jpg)

## Ltcm

Meaning ▴ Long-Term Capital Management (LTCM) refers to a highly leveraged hedge fund that operated in the 1990s, employing sophisticated quantitative arbitrage strategies across global fixed income, equity, and derivatives markets. </a><a href="https://prime.greeks.live/area/commercially-reasonable-procedures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Geometric planes, light and dark, interlock around a central hexagonal core. This abstract visualization depicts an institutional-grade RFQ protocol engine, optimizing market microstructure for price discovery and high-fidelity execution of digital asset derivatives including Bitcoin options and multi-leg spreads within a Prime RFQ framework, ensuring atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-architecture.jpg)

## Commercially Reasonable Procedures

Meaning ▴ Commercially Reasonable Procedures defines the standard of conduct for actions taken within a financial context, mandating diligence and adherence to prevailing market practices and conditions. </a><a href="https://prime.greeks.live/question/how-do-courts-interpret-commercially-reasonable-procedures-in-close-out-amount-calculations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Detailed metallic disc, a Prime RFQ core, displays etched market microstructure. Its central teal dome, an intelligence layer, facilitates price discovery](https://options.greeks.live/wp-content/uploads/2025/07/principal-operating-system-intelligence-layer-powering-digital-asset-derivatives-rfq-protocols-for-optimal-execution.jpg)

## Commercially Reasonable Result

Courts interpret "commercially reasonable procedures" as an objective, evidence-based standard for valuing derivative close-outs. </a><a href="https://prime.greeks.live/area/non-defaulting-party/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract forms depict interconnected institutional liquidity pools and intricate market microstructure. Sharp algorithmic execution paths traverse smooth aggregated inquiry surfaces, symbolizing high-fidelity execution within a Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-prime-os-1.jpg)

## Non-Defaulting Party

Meaning ▴ The Non-Defaulting Party designates the entity within a bilateral or multilateral contractual agreement, particularly in digital asset derivatives, that remains in full compliance with its obligations and terms when a counterparty fails to meet its own, thereby triggering a default event. </a><a href="https://prime.greeks.live/question/how-does-the-ccp-default-waterfall-protect-non-defaulting-members/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated metallic mechanism with integrated translucent teal pathways on a dark background. This abstract visualizes the intricate market microstructure of an institutional digital asset derivatives platform, specifically the RFQ engine facilitating private quotation and block trade execution](https://options.greeks.live/wp-content/uploads/2025/07/systemic-framework-for-institutional-digital-asset-derivatives-rfq-price-discovery-and-atomic-settlement.jpg)

## Defaulting Party

A CCP's default waterfall shields non-defaulting members by sequentially activating layers of financial resources to absorb and contain a defaulter's losses. </a><a href="https://prime.greeks.live/question/what-are-the-key-differences-between-a-prime-brokerage-agreement-and-an-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A robust, dark metallic platform, indicative of an institutional-grade execution management system. Its precise, machined components suggest high-fidelity execution for digital asset derivatives via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-high-fidelity-price-discovery-and-atomic-settlement-infrastructure.jpg)

## Master Agreement

A Prime Brokerage Agreement is a centralized service contract; an ISDA Master Agreement is a standardized bilateral derivatives protocol. </a><a href="https://prime.greeks.live/area/two-way-payments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract image showing interlocking metallic and translucent blue components, suggestive of a sophisticated RFQ engine. This depicts the precision of an institutional-grade Crypto Derivatives OS, facilitating high-fidelity execution and optimal price discovery within complex market microstructure for multi-leg spreads and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-market-microstructure-for-institutional-digital-asset-derivatives-rfq.jpg)

## Two-Way Payments

Meaning ▴ Two-way payments represent a financial mechanism enabling bidirectional value transfer between two distinct entities or accounts within a single established channel. </a><a href="https://prime.greeks.live/area/2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated proprietary system module featuring precision-engineered components, symbolizing an institutional-grade Prime RFQ for digital asset derivatives. Its intricate design represents market microstructure analysis, RFQ protocol integration, and high-fidelity execution capabilities, optimizing liquidity aggregation and price discovery for block trades within a multi-leg spread environment](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-proprietary-architecture-driving-high-fidelity-digital-asset-derivatives-execution-via-rfq-protocols-and-optimized-market-microstructure-dynamics.jpg)

## 2002 Isda

Meaning ▴ The 2002 ISDA Master Agreement constitutes a standardized contractual framework, widely adopted within the over-the-counter (OTC) derivatives market, establishing foundational terms for bilateral derivatives transactions. </a><a href="https://prime.greeks.live/question/what-is-the-procedural-impact-of-market-disruption-on-the-timing-of-a-close-out-valuation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A specialized hardware component, showcasing a robust metallic heat sink and intricate circuit board, symbolizes a Prime RFQ dedicated hardware module for institutional digital asset derivatives. It embodies market microstructure enabling high-fidelity execution via RFQ protocols for block trade and multi-leg spread](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-dedicated-hardware-for-institutional-rfq-execution.jpg)

## Procedural Burden

A market disruption triggers a conditional postponement of valuation, escalating to a structured, agent-driven determination if the disruption persists. </a><a href="https://prime.greeks.live/area/commercially-reasonable/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A metallic disc, reminiscent of a sophisticated market interface, features two precise pointers radiating from a glowing central hub. This visualizes RFQ protocols driving price discovery within institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-price-discovery.jpg)

## Commercially Reasonable

Meaning ▴ Commercially Reasonable refers to actions, terms, or conditions that a prudent party would undertake or accept in a similar business context, aiming to achieve a desired outcome efficiently and effectively while considering prevailing market conditions, industry practices, and available alternatives. </a><a href="https://prime.greeks.live/area/market-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered modular components display a central control, data input panel, and numerical values on cylindrical elements. This signifies an institutional Prime RFQ for digital asset derivatives, enabling RFQ protocol aggregation, high-fidelity execution, algorithmic price discovery, and volatility surface calibration for portfolio margin](https://options.greeks.live/wp-content/uploads/2025/07/firm-fx-options-rfq-trade-system-key-microstructure-data-flow-core-engine.jpg)

## Market Data

Meaning ▴ Market Data comprises the real-time or historical pricing and trading information for financial instruments, encompassing bid and ask quotes, last trade prices, cumulative volume, and order book depth. </a><a href="https://prime.greeks.live/area/early-termination-date/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated, multi-layered trading interface, embodying an Execution Management System EMS, showcases institutional-grade digital asset derivatives execution. Its sleek design implies high-fidelity execution and low-latency processing for RFQ protocols, enabling price discovery and managing multi-leg spreads with capital efficiency across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-platform-market-microstructure.jpg)

## Early Termination Date

Meaning ▴ The Early Termination Date specifies a pre-agreed date or a date triggered by specific events, upon which a derivative contract or financial agreement concludes prior to its originally scheduled maturity. </a>

**Tags:** [Close-Out Amount](https://options.greeks.live/area/close-out-amount/), [ISDA Master Agreement](https://options.greeks.live/area/isda-master-agreement/), [Default Interest](https://options.greeks.live/area/default-interest/), [2002 ISDA Master Agreement](https://options.greeks.live/area/2002-isda-master-agreement/), [Risk Management](https://options.greeks.live/area/risk-management/), [2002 ISDA](https://options.greeks.live/area/2002-isda/)	

## Discover More

- 
### [How Does the 2002 ISDA Master Agreement Change Valuation Risk?](https://options.greeks.live/question/how-does-the-2002-isda-master-agreement-change-valuation-risk/)
![A central control knob on a metallic platform, bisected by sharp reflective lines, embodies an institutional RFQ protocol. This depicts intricate market microstructure, enabling high-fidelity execution, precise price discovery for multi-leg options, and robust Prime RFQ deployment, optimizing latent liquidity across digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-rfq-digital-asset-derivatives-execution-engine-core-microstructure.jpg)

The 2002 ISDA Agreement re-architects valuation risk by mandating an objective, evidence-based close-out process.

- 
### [How Does Market Volatility Affect the Determination of a Commercially Reasonable Close-Out Amount?](https://options.greeks.live/question/how-does-market-volatility-affect-the-determination-of-a-commercially-reasonable-close-out-amount/)
![Intersecting abstract geometric planes depict institutional grade RFQ protocols and market microstructure. Speckled surfaces reflect complex order book dynamics and implied volatility, while smooth planes represent high-fidelity execution channels and private quotation systems for digital asset derivatives within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocols-digital-asset-microstructure-execution.jpg)

Market volatility stress-tests the objective reasonableness of a close-out by degrading the quality of valuation data.

- 
### [How Does the ISDA Master Agreement Govern the Close-Out Process?](https://options.greeks.live/question/how-does-the-isda-master-agreement-govern-the-close-out-process/)
![A precise teal instrument, symbolizing high-fidelity execution and price discovery, intersects angular market microstructure elements. These structured planes represent a Principal's operational framework for digital asset derivatives, resting upon a reflective liquidity pool for aggregated inquiry via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-trading-platform-underpinning-rfq-protocol-liquidity-aggregation-and-high-fidelity-execution.jpg)

The ISDA Master Agreement provides a rules-based protocol to terminate derivative transactions upon default, netting values into one payment.

- 
### [How Does the 2002 ISDA Master Agreement Handle Events like Market Disruptions?](https://options.greeks.live/question/how-does-the-2002-isda-master-agreement-handle-events-like-market-disruptions/)
![A sleek, white, semi-spherical Principal's operational framework opens to precise internal FIX Protocol components. A luminous, reflective blue sphere embodies an institutional-grade digital asset derivative, symbolizing optimal price discovery and a robust liquidity pool. This depicts high-fidelity execution of block trades through RFQ protocols in complex market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-5.jpg)

The 2002 ISDA Master Agreement uses predefined protocols like Force Majeure to systematically defer and terminate trades during market disruptions.

- 
### [How Does the Framework Address Differences between the 1992 and 2002 Isda Master Agreements?](https://options.greeks.live/question/how-does-the-framework-address-differences-between-the-1992-and-2002-isda-master-agreements/)
![A cutaway reveals the intricate market microstructure of an institutional-grade platform. Internal components signify algorithmic trading logic, supporting high-fidelity execution via a streamlined RFQ protocol for aggregated inquiry and price discovery within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-execution-for-digital-asset-derivatives-via-rfq-protocols.jpg)

The 2002 ISDA Agreement enhances legal certainty by replacing subjective loss calculations with an objective, commercially reasonable standard.

- 
### [How Did the Collapse of Ltcm Influence the Changes in the 2002 Isda Master Agreement?](https://options.greeks.live/question/how-did-the-collapse-of-ltcm-influence-the-changes-in-the-2002-isda-master-agreement/)
![A precision-engineered, multi-layered system visually representing institutional digital asset derivatives trading. Its interlocking components symbolize robust market microstructure, RFQ protocol integration, and high-fidelity execution. Gears and structural elements underscore atomic settlement, liquidity aggregation, and capital efficiency within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-4.jpg)

The LTCM collapse forced a systemic upgrade in derivatives law, replacing rigid valuation with flexible, crisis-proof close-out mechanics.

- 
### [What Constitutes a “Commercially Reasonable” Procedure under the 2002 ISDA Agreement?](https://options.greeks.live/question/what-constitutes-a-commercially-reasonable-procedure-under-the-2002-isda-agreement/)
![Precision-engineered modular components, with transparent elements and metallic conduits, depict a robust RFQ Protocol engine. This architecture facilitates high-fidelity execution for institutional digital asset derivatives, enabling efficient liquidity aggregation and atomic settlement within market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-optimizing-high-fidelity-execution-and-liquidity-aggregation.jpg)

A commercially reasonable procedure is an objectively fair and good-faith process for valuing terminated derivatives.

- 
### [How Does the 2002 ISDA Improve upon the 1992 Agreement’s Termination Process?](https://options.greeks.live/question/how-does-the-2002-isda-improve-upon-the-1992-agreements-termination-process/)
![A metallic disc intersected by a dark bar, over a teal circuit board. This visualizes Institutional Liquidity Pool access via RFQ Protocol, enabling Block Trade Execution of Digital Asset Options with High-Fidelity Execution. It signifies Market Microstructure Optimization and Atomic Settlement on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-principal-operational-framework-market-microstructure-high-fidelity-execution.jpg)

The 2002 ISDA enhances termination by replacing subjective loss with an objective, commercially reasonable close-out valuation protocol.

- 
### [Why Might a Firm Still Choose to Use the 1992 ISDA Framework despite the 2002 Updates?](https://options.greeks.live/question/why-might-a-firm-still-choose-to-use-the-1992-isda-framework-despite-the-2002-updates/)
![A sharp, multi-faceted crystal prism, embodying price discovery and high-fidelity execution, rests on a structured, fan-like base. This depicts dynamic liquidity pools and intricate market microstructure for institutional digital asset derivatives via RFQ protocols, powered by an intelligence layer for private quotation.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-price-discovery-execution.jpg)

A firm's use of the 1992 ISDA is a calculated choice prioritizing the deep legal certainty of established precedent over newer mechanics.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "What Are the Key Differences between the 1992 and 2002 ISDA Master Agreements regarding Termination?",
            "item": "https://options.greeks.live/question/what-are-the-key-differences-between-the-1992-and-2002-isda-master-agreements-regarding-termination/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/what-are-the-key-differences-between-the-1992-and-2002-isda-master-agreements-regarding-termination/"
    },
    "headline": "What Are the Key Differences between the 1992 and 2002 ISDA Master Agreements regarding Termination? \u25b4 Question",
    "description": "The 2002 ISDA replaces the 1992's elective termination valuations with a single, objectively reasonable Close-out Amount. \u25b4 Question",
    "url": "https://options.greeks.live/question/what-are-the-key-differences-between-the-1992-and-2002-isda-master-agreements-regarding-termination/",
    "datePublished": "2025-07-30T08:27:59+00:00",
    "dateModified": "2025-07-31T06:09:09+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-platform-intelligence-layer-optimizing-high-fidelity-execution.jpg",
        "caption": "A futuristic, dark metallic device with a prominent central sphere and intricate surrounding mechanisms, illuminated by teal accents, represents a Crypto Derivatives OS facilitating institutional grade trading. The central Intelligence Layer processes implied volatility and volatility surface data for Bitcoin Options and Ethereum Futures, driving algorithmic trading. Integrated RFQ protocols ensure private quotation and block trade execution, minimizing slippage and adverse selection, optimizing capital efficiency and best execution."
    },
    "keywords": [
        "2002 ISDA",
        "2002 ISDA Master Agreement",
        "Close-Out Amount",
        "Commercially Reasonable",
        "Commercially Reasonable Procedures",
        "Counterparty Risk Management",
        "Default Interest",
        "Early Termination Date",
        "Events of Default",
        "Force Majeure",
        "Force Majeure Event",
        "ISDA Master Agreement",
        "LTCM",
        "Market Data",
        "Market Quotation",
        "Non-Defaulting Party",
        "Risk Management",
        "Set-Off Provision",
        "Specified Transaction",
        "Termination Event",
        "Termination Events",
        "Two-Way Payments"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "FAQPage",
    "mainEntity": [
        {
            "@type": "Question",
            "name": "What Was The Strategic Flaw Of Optional Payment Methods?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The 1992 ISDA contained a structural anomaly known as the \"First Method\" of payment, which permitted a one-way payment obligation. Under this method, upon termination due to a default, only the non-defaulting party could receive a payment if the net value of all transactions was in its favor. If the net value favored the defaulting party, the non-defaulting party was not required to pay. While market practice had already shifted decisively toward the \"Second Method\" (which required a two-way payment regardless of fault), the continued existence of the First Method in the 1992 document represented a significant source of legal and credit risk. Its removal in the 2002 Agreement was a critical strategic move to align the master agreement with established market consensus and insolvency law principles in many jurisdictions, which favor the netting of all obligations. Mandating two-way payments ensures a more equitable outcome and simplifies the credit analysis of counterparty exposure."
            }
        },
        {
            "@type": "Question",
            "name": "How Does The Close Out Amount Redefine The Burden Of Proof?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The core operational challenge in executing a termination is the calculation of the final payment amount. The 2002 ISDA\u2019s \"Close-out Amount\" imposes a significantly more rigorous procedural burden than either of the 1992 ISDA's options. The 1992 \"Loss\" standard was largely subjective, requiring a party to determine its losses in \"good faith,\" a standard that English courts interpreted as a test of rationality (the so-called \"Wednesbury\" test). A determination could only be challenged if it was one that no reasonable party could have reached. In contrast, the 2002 standard of \"commercially reasonable procedures\" and a \"commercially reasonable result\" introduces an objective benchmark. A non-defaulting party must now be prepared to demonstrate that its methodology and the final figure would be considered reasonable by an objective third party."
            }
        }
    ]
}
```


---

**Original URL:** https://options.greeks.live/question/what-are-the-key-differences-between-the-1992-and-2002-isda-master-agreements-regarding-termination/
