Definition: ISDA (International Securities Derivatives Association) & Co refer to a group of financial institutions that provide securities derivatives trading services for mutual fund, exchange traded fund, investment trust and other types of financial instruments. The ISDA (International Securities Derivatives Association) is an association formed by 70 major financial institutions around the world. It is responsible for defining the technicalities in the development and implementation of international securities derivatives markets. ISDA & Co defines a derivative contract as an agreement between two parties where one party sells or buys an underlying security, called the “derivative instrument,” and the other party agrees to accept certain risks that are associated with such trade. The ISDA & Co defines a security as a financial instrument that is traded on a securities exchange or market. The terms "security" include all securities listed in a national stock exchange or designated securities exchanges of one member state, unless they are listed in another member state and the regulations of the latter differ from those of the former. The ISDA & Co defines risk management as the process of identifying potential risks associated with financial instruments, including derivatives. The term refers to the strategies used by the market participants (such as brokers, dealers, clearing agencies, and traders) to manage these risks through various means, such as hedging, leverage, or other techniques. The ISDA & Co defines the "derivative instrument" as a specific type of security that is traded on an exchange. The derivative instrument should be listed in a national stock exchange or designated securities exchanges of one member state and the regulations of the latter differ from those of the former.
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