Master Swap Agreement

Definition of 'Master Swap Agreement'


A basic, standardized swap contract created by the International Swaps and Derivatives Association in the late 1980s. The standard agreement identifies the two parties entering the transaction; describes the terms of the arrangement, such as payment, events of default and termination; and lays out all other legalities of the deal.

Investopedia explains 'Master Swap Agreement'


By signing a master swap agreement, the two parties who wish to engage in a swap transaction simplify the process because the basic legal terms are already established and only the specific financial terms, such as rate and maturity, must be discussed. Signing a master swap agreement also makes it easier for the same parties to engage in additional transactions in the future because these can be based on the initial agreement.


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