In any negotiation process the negotiator plays a vital role. Likewise, in an ISDA negotiation the negotiator is the vital part who fixes up agreement as per which the two parties become capable of trading derivatives. Introduction to the OTC Market When the derivatives and traded directly between banks, funds and corporations this is branded as ‘over the counter’ (OTC) derivatives market. However, derivatives and other financial products do get exchanged frequently but ISDA deals with the OTC market. What’s ISDA? International Swaps and Derivatives Association (ISDA) is a worldwide officialdom. It helps in upholding the standard in the OTC market. ISDA promotes safer trading of OTC derivatives and also ensures reduction in legal and credit risk. How ISDA Works? ISDA develops Master Agreements and other deeds which act as templates for agreements connecting the institution which is governing the trading of derivatives and relevant financial commodities. Generally, the organisations customise this Master Agreement templates developed by ISDA and amend it as per the form of deal they are entering into. Risk Management When I think about the Australian site for the International Self-Defence Association, the first thought that clicks to my mind is that ISDA and this Australian site not just share the acronym but also share the objective i.e. self defense. The objective of the ISDA Master Agreement negotiation is also self defence from mal practices in the industry. The risk manager is asked about the inclusion of terms in a draft of ISDA Master Agreement Schedule, the often received response is “Standard Terms”. However, they fail to realise that there does not exist and phrase as “Standard Terms” in the world of ISDA. How the Parties Work?  Every interested party of the trading agreement will get in negotiators to dig out the details. Then the negotiators will list out the key points on which the negotiation process can depend upon.  Every party would wish to incorporate the terms favourable to them and get it accepted by the other party. Here lies the main task of the negotiator. The negotiator has to convince the other party on most of the terms which are favourable to his party. The negotiator alters the agreement as per the credit risk management stance of the party he is representing. For instance, if his bank is quite conventional, he will aim to reduce the possible size of unsecured credit lines to the other party.  However, counter party risk is a major concern for the parties who are a part of OTC derivatives. The main reason behind this is because these derivations are not traded via exchange. Therefore, each party who is a part of it will be concerned about the fact that if the other party will stick on to the terms of this agreement or not. The Negotiation Part  The main aim of the negotiator must be to protect the interest of the party he is representing even in the case of default by the opposite party. The role of the negotiator is to land up reaching with as agreement which completely protects the rights of his client even in the most awful situation. The negotiator must keep the risk management stance in mind.  Eligibility criteria for becoming an ISDA negotiator, does not require one to be a trained lawyer, however it can be an advantage. Mostly, they are the ones the hardcore knowledge of financial product in which the trading is done. The negotiator should be capable of getting the agreement executed with most of the terms suggested by his party incorporated in it. So the Trading can take place promptly between both the parties.