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Derivatives are essential in the global economy as they allow firms to hedge risks. However, effective market operation relies on strong legal foundations. Without common legal standards, each firm would create unique contracts, leading to disagreements and lengthy negotiations. The ISDA Master Agreement has established such standardization over 35 years by offering a common template for trading relationships between derivatives counterparties. It defines key terms, such as default and contract termination conditions, enabling firms to trade confidently with a shared understanding of the market. The agreement also permits customization for various transactions in case of default, clearly outlining amounts owed.