On March 3, 2026, the International Swaps and Derivatives Association (ISDA) and EMTA, the trade association for emerging markets, published the 2026 FX Definitions, an integrated framework for cleared and non-cleared foreign exchange (FX) derivatives transactions. The 2026 FX Definitions reflect almost three decades of market developments and will replace the 1998 FX and Currency Option Definitions. The 1998 FX Definitions will continue to be used until the expected industry transition date of November 22, 2027. In the interim, FX derivatives market participants will need to familiarize themselves with and work to implement the new 2026 FX Definitions.
Why the 1998 FX Definitions Are Being Replaced
The 1998 FX Definitions have been widely used by market participants to assist with the documentation of privately negotiated FX and currency option transactions, and are generally incorporated by reference into the 2002 ISDA Master Agreement and Schedule. Under this existing framework, the terms for a given FX transaction have been scattered across a patchwork of documents—including the core definitions booklet, annexes, additional provisions and supplements, and EMTA template terms and bilateral master confirmation agreements.
This increasingly unwieldy body of documentation, which represents periodic efforts to address the growth and evolution of the FX and currency option markets, has highlighted the need for comprehensive consolidation and modernization, particularly in light of anticipated expansion of those markets. The 2026 FX Definitions address this through a dual effort: consolidating the documentation into a single unified framework and updating substantive provisions to meet changing market standards.
Structure of the 2026 FX Definitions
The 2026 FX Definitions, which are available on ISDA’s MyLibrary platform, are primarily composed of a Main Book and five supporting matrices. The Main Book serves as the central document, setting out the substantive operative provisions and definitions, while the matrices supplement it, providing additional currency- and transaction-specific detail. Each matrix plays a distinct role in the overall framework:
- Emerging Markets Currency Non-Deliverable Transactions Matrix. Sets out provisions applicable to each listed currency pair and non-deliverable transaction type (i.e., FX or FX option), consolidating information currently included in relevant EMTA documentation.
- Currencies/Financial Centers Matrix. Sets out currency codes, definitions of each currency, and principal financial centers.
- Developed Markets Currency Matrix. Identifies developed market currency pairs. A non-deliverable transaction qualifies as a Developed Markets Non-Deliverable Transaction and is therefore subject to certain relevant provisions of the 2026 FX Definitions if the currency pair is listed within the matrix.
- Offshore CNY Disruption Fallback Matrix. Sets out fallback provisions—including the applicable fallback sequence—that apply when a disruption event occurs in an offshore Chinese yuan (CNY) transaction (i.e., a transaction involving CNY traded and settled in the offshore centers of Hong Kong, Singapore, or Taipei).
- Settlement Rate Options Matrix. Sets out settlement rate options provisions applicable to both emerging and non-emerging currency pairs. It replaces the long-form narrative descriptions found in the 1998 FX Definitions with a table-based format intended to make the relevant provisions easier to identify and apply.
The 2026 FX Definitions employ a versioning mechanism that allows the framework to evolve alongside market developments. Updated versions, once published, will govern all FX transactions entered into on or after their effective date (including both new and rolled transactions), while prior transactions remain subject to the previous version. These operational updates are akin to the 2021 ISDA Interest Rate Derivatives Definitions, which consolidated various amendments and supplements to the original 2006 ISDA Definitions, and facilitated user-friendly, real-time updates.
Substantive Updates in the 2026 FX Definitions
Beyond structural consolidation, the 2026 FX Definitions introduce a number of substantive updates to key provisions.
Disruption events and fallbacks
The 2026 FX Definitions substantially overhaul the Disruption Events and Fallbacks framework, addressing limitations and market developments that have emerged since the 1998 FX Definitions were introduced. Notable changes include:
- Set of Available Disruption Events and Disruption Fallbacks. The revised framework refines the array of Disruption Events and Disruption Fallbacks—removing those no longer in use, updating those carried over from the 1998 FX Definitions, and introducing new ones as needed.
- Presumed Disruption Events for Deliverable FX Transactions. For deliverable FX transactions, three Disruption Events are now presumed to apply automatically unless the parties otherwise agree—a significant departure from the 1998 FX Definitions, which included no default Disruption Events for deliverable FX transactions. Hierarchy rules clarify which Disruption Event applies when a single incident could trigger more than one.
- Disruption Fallbacks Architecture. The framework for Disruption Fallbacks has been revised and streamlined and now includes, among other updates, standardized waterfall sequences for both deliverable and non-deliverable FX transactions.
- Offshore CNY Transactions. Offshore CNY transaction provisions have been consolidated into a dedicated section within the Main Book, which references the Offshore CNY Disruption Fallback matrix for certain key terms and provisions. This replaces the previously fragmented approach that relied on separate ISDA/EMTA documentation (e.g., the 2021 Additional Provisions for Offshore Deliverable CNY Transactions).
Calculation Agent Provisions
A new calculation agent standard requires calculation agents to act in good faith and use commercially reasonable procedures to produce a commercially reasonable result, consistent with the standard adopted in other ISDA documentation (e.g., the 2021 ISDA Interest Rate Derivatives Definitions).
New elective dispute resolution provisions for joint calculation agents have also been introduced. Generally, when the parties have elected to act jointly as calculation agent but are unable to agree on a calculation within one business day, they must mutually select an independent leading dealer whose determination will be binding.
Full Automated Exercise Mechanism
A Full Automated Exercise mechanism has been introduced for deliverable, European-style FX option transactions as an alternative to the existing Automatic Exercise provisions, which remain the default. For this mechanism to apply, the parties must elect it in the Confirmation and specify the applicable Settlement Rate Option. When these conditions are met, the option will be exercised or expire automatically at the specified expiration time and date, and any intervention by either party will have no effect.
Calendar Adjustment Events Provisions
New provisions address the economic impact on FX transactions when a day expected to be a business day is later redesignated as a non-business day, effectively extending the term of the FX transaction and making the settlement date later than originally anticipated. These provisions are elective. When applied, an adjustment mechanism—either an offsetting transaction or an offsetting fee—will seek to neutralize the economic impact on the affected FX transaction.
Mandatory Early Termination and Exercise Provisions
New provisions introduce a standardized Mandatory Early Termination regime and streamlined procedures for the partial and multiple exercise of option rights, replacing the informal mechanics under the 1998 FX Definitions that often relied on bespoke drafting.
Implementation Timeline and Impact on Legacy Transactions
As set forth in the ISDA 2026 FX Definitions Industry Implementation Roadmap, Swift’s messaging services are expected to transition to the 2026 FX Definitions on November 22, 2027. Various message formats will be updated to be compatible with the 2026 FX Definitions, and Swift will no longer support the 1998 FX Definitions. Legacy FX transactions, meaning those executed before November 22, 2027, will continue to reference the 1998 FX Definitions until they roll over or until the counterparties bilaterally agree to incorporate the 2026 FX Definitions. Based on data published by the Bank for International Settlements, ISDA estimates that almost 80% of legacy FX transactions will be terminated or rolled into new positions referencing the 2026 FX Definitions by the end of 2028.
Steps Market Participants Should Take Now
The industry is expected to transition to the 2026 FX Definitions by November 22, 2027. Given the scope of these changes, market participants should begin preparing for implementation well before this date. ISDA’s roadmap can help organizations adopt the 2026 FX Definitions, and further educational materials are expected to follow. Market participants may find these resources a helpful starting point as they develop their implementation plans. The Alston & Bird team can also provide advice throughout this transition process.
If you have any questions, or would like additional information, please contact one of the attorneys on our Finance, Financial Services, or Investment Funds teams.
You can subscribe to future advisories and other Alston & Bird publications by completing our publications subscription form.