Will the exit price be right in new Isda docs?

Industry body is updating unloved procedure for valuing terminated swaps

It’s a common problem in derivatives markets.

A buy-side firm wants out of a swap, so approaches its dealer counterparty to terminate the trade. In doing so, it risks opening “a whole can of worms”, as Simon Firth, a capital markets partner at Linklaters, put it during a recent conference call hosted by the International Swaps and Derivatives Association.

The problem is that the two parties must agree on a cash value for the remaining portion of the contract. Typically, a calculation agent is