2002 ISDA equity definitions VE

ISDA has launched the 2002 ISDA Equity Derivatives Definitions (Versionable Edition) (the "Equity Definitions VE"), replacing the static 2002 ISDA Equity Derivatives Definitions, with an industry implementation date of October 26, 2026.

1. Background and rationale

The 2002 ISDA Equity Derivatives Definitions was a static document — updates could only be made via separate supplemental provisions, meaning parties not only had to incorporate the 2002 ISDA Equity Derivatives Definitions, but also had to amend or add to their documentation to apply the relevant supplemental provisions, leading to fragmented documentation. The Equity Definitions VE resolves this by introducing a versionable, digital definitional booklet hosted on ISDA's MyLibrary platform.¹ Each time the definitions are updated, a new consolidated version is published. The version in effect at the trade date automatically applies to new transactions, eliminating the need for ongoing amendments to apply the relevant supplemental provisions.²

2. Version 1.0 and Version 2.0: key changes

Version 1.0 (published January 25, 2024) was largely a platform-enablement step, substantively identical to the 2002 Equity Definitions, save for a new Article 1(A) enabling future versioned updates and replacement of references to the 2000 ISDA Definitions with the 2021 ISDA Interest Rate Derivatives Definitions.

Version 2.0 (published January 21, 2025) introduced the following substantive changes to the 2002 Equity Definitions and did not include the more complex changes made in the 2011 ISDA Equities Definitions. The changes include:

• Separate Valuation / Combined Calculation: New provisions for Share Basket and Index Basket Transactions allowing variables to be determined separately per Share or Index, with staggered settlement available.
• Futures Price Valuation for Shares: Extended to Shares (previously Index-only), with new elective "Cancellation and Payment" and "Exchange Adjustment" provisions if an Exchange-traded Contract is discontinued.
• VWAP and TWAP Provisions: New elective pricing mechanics for determining Relevant Price, Final Price, or Settlement Price on a volume- or time-weighted average basis.
• Benchmark Provisions: The provisions from the ISDA Benchmarks Supplement (addressing EU Benchmarks Regulation requirements) are now incorporated directly into the Equity Definitions VE.
• Depository Receipt Provisions: Full Depository Receipt Lookthrough and Partial Depository Receipt Lookthrough provisions consolidated into Version 2.0 from the 2007 Depository Receipt Supplements.
• T2 Definition: New definition replacing prior references to TARGET or TARGET2.

3. Protocol: adherence process and key dates

3.1 Purpose and scope

The ISDA 2025 – 2002 ISDA Equity Derivatives Definitions (Versionable Edition) Protocol allows parties of existing Equity Derivative Master Confirmation Agreements to amend those agreements to incorporate the Equity Definitions VE in place of the 2002 Equity Definitions. Using a protocol eliminates the need for costly and time-consuming bilateral negotiations and allows the market to transition in a synchronized manner.

Critically, the Protocol only amends transactions with a trade date on or after October 26, 2026 (or, if later, when the date of the Protocol becomes effective between the relevant parties). Legacy trades executed before that date are entirely unaffected. Bespoke provisions within existing agreements are preserved and carry over mutatis mutandis to the equivalent provisions in the applicable version of the Equity Definitions VE.

3.2 Which version of the Equity Definitions VE applies to a given transaction?

This is an important practical point. Once an Equity Derivative Master Confirmation Agreement has been amended pursuant to the Protocol, it incorporates the Equity Definitions VE as amended from time to time. However, for any individual equity derivative transaction entered into under that agreement, the version of the Equity Definitions VE that applies is the version in effect as at the Trade Date of that specific transaction — not any later version published after the trade is executed.

This means:

• A trade entered into on October 26, 2026 will incorporate the version of the Equity Definitions VE current at that date (currently Version 2.0).
• If ISDA subsequently publishes Version 3.0, trades executed on or after that publication date will automatically incorporate Version 3.0 — but trades already executed will continue to be governed by the version in effect at their respective trade dates.
• Parties do not need to take any further action to ensure new trades pick up the latest version; this happens automatically by operation of the Master Confirmation Agreement as amended by the Protocol.
• If parties wish to apply new elective provisions introduced in a later version to a specific transaction, they must expressly specify those provisions as applicable in the relevant confirmation.

This version lock-in mechanism provides certainty — each transaction's governing definitions are fixed at execution and will not be retroactively altered by future updates to the Equity Definitions VE.

3.3 Key dates & protocol adherence

The one-year gap between Protocol open date and the effective date (between October 27, 2025 and October 26, 2026) is designed to give market participants sufficient time to update internal processes, systems and confirmation templates (including electronic confirmations) before the go-live date.

3.4 How to adhere

• Any entity (ISDA member or not) may adhere by submitting a signed Adherence Letter via the ISDA website at www.isda.org. A wet-ink signature is not required.³
• A one-time fee of U.S. $500 per legal entity applies. Reduced flat fees are available for corporate or fund groups: U.S. $12,500 for groups of 25–100 entities; U.S. $25,000 for groups of more than 100 entities.
• Investment and asset managers may adhere on behalf of clients using one of three methods: the All Clients, Excluded Clients or Specified Clients adherence methods. Where adherence is on behalf of some but not all clients, the relevant client list must be disclosed via the Agency Adherence Module provided by S&P Global.
• Parties adhering both as principal (for proprietary trades) and as agent (on behalf of clients) must submit two separate Adherence Letters.
• There is currently no closing date for adherence, though ISDA may designate one on 30 days' notice.
• As an alternative to the Protocol, ISDA published a bilateral amendment agreement on October 27, 2025 for parties who prefer a negotiated two-party approach.

3.5 Revocation

An Adhering Party may withdraw adherence in respect of future counterparties by delivering a revocation notice to ISDA during the period October 1–31 of any calendar year, with effect from December 31 of that year. Revocation does not affect amendments already made with existing Adhering Parties.

3.6 Future versions of the Equity Definitions VE

Note that the timelines for drafting future versions of the Equity Definitions VE are all dependent on member discussion, demand and priorities. Participation in the relevant ISDA Equity Definitions working groups⁴ is the means by which market participants are able to advocate the need for future versions of the Equity Definitions VE and the level of changes to be introduced in those future versions.

_{1 ISDA MyLibrary platform: https://www.isda.org/isda-solutions-infohub/mylibrary/
2 ISDA Equity Definitions VE InfoHub: https://www.isda.org/2025/03/05/equity-definitions-ve-infohub/
3 Protocol adherence: https://www.isda.org/protocol/isda-2025-equity-derivatives-definitions-ve-protocol/
4 The ISDA Equity Definitions Legal Group (equity derivatives lawyers only) and the ISDA Equity Market  Infrastructure Group all ISDA members).}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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