ISDA

ISDA is an abbreviation for International Swaps and Derivatives Association. It is the largest global financial trade assosiation, which develop the ISDA Master agreetment. It contains a lot of leagal rule for trading derivatives. When we trade derivative producst, we have to issue some formal documents to leave a evidence to prevent each others different claim. That is to say, derivative trading is safely contracted each other by refering ISDA rule. For example, when we trade some swap which menas exchage some fixed rate for floating rate, we must calculate total present value of this trading. In the way of this calculation, we have to build exact cash flows and this accrued interest rate needs to be caluculated, which means "timeinterval" * couponrate. Of course, it is easily described as mathematical word like r*t , but in practice, it has delicate modification for timeinterval because interval has a lot of meaning. 1 year is 365day?? 366day?? This detail problem is resolved by refering ISDA document.