ISDA Tackles Tax In Master Clause

The International Swaps and Derivatives Association has introduced an optional clause for its Master Agreements that will eliminate the obligation for a foreign financial institution to pay a tax in a transaction where another counterparty is not compliant with the U.S. Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act. The clause is aimed at foreign financial institutions trading derivatives with U.S. persons and non-participating institutions in FATCA.