Talk:Holding and Using Posted Collateral - NY CSA Provision: Difference between revisions

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(Created page with "1994 CSA Para 6 Holding and Using Posted Collateral 6(a) Care of Posted Collateral. Without limiting the Secured Party’s rights under Paragraph 6(c), the Secured Party will exercise reasonable care to assure the safe custody of all Posted Collateral to the extent required by applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own p...")
 
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1994 CSA
2018 IM CSD


Para 6 Holding and Using Posted Collateral
6. Custody Arrangements and the Control Agreement
6(a) Care of Posted Collateral. Without limiting the Secured Party’s rights under Paragraph 6(c), the Secured Party will exercise reasonable care to assure the safe custody of all Posted Collateral to the extent required by applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Posted Collateral, including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto.
6(a) General. The Custodian (IM) appointed with respect to each party as Chargor is set out in Paragraph 13. Each party as the Chargor and the other party as the Secured Party and the relevant Custodian (IM) have entered, or will, on or before the first day amounts are required to be transferred hereunder, enter into the Control Agreement regulating the rights of each party to serve instructions on the Custodian (IM). Prior to the enforcement of its rights under Paragraph 8, the Secured Party will have no right to hold (other than in accordance with Paragraph 1(b) or as otherwise agreed between the parties) and have no duty with respect to Posted Credit Support (IM), including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining to the Posted Credit Support (IM).
6(b) Eligibility to Hold Posted Collateral; Custodians.
6(b) Custodian (IM) Risk. Unless otherwise specified in Paragraph 13 with respect to a party as the Secured Party and the other party as the Chargor:
6(b)(i) General. Subject to the satisfaction of any conditions specified in Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral or to appoint an agent (a “Custodian”) to hold Posted Collateral for the Secured Party. Upon notice by the Secured Party to the Pledgor of the appointment of a Custodian, the Pledgor’s obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the holding of that Posted Collateral by the Secured Party for which the Custodian is acting.
(i) the Chargor will be liable for the acts or omissions of the Custodian (IM) to the same extent that the Chargor would be liable hereunder for its own acts or omissions and any such act or omission of the Custodian (IM) will be deemed to be the act or omission of the Chargor for purposes of Paragraph 7 unless Custodian Event is specified as applicable in Paragraph 13, in which case, the consequences of any act or omission of the Custodian (IM) that constitutes a Custodian Event will be as set out in the “Custodian Event” provisions in Paragraph 13;
6(b)(ii) Failure to Satisfy Conditions. If the Secured Party or its Custodian fails to satisfy any conditions for holding Posted Collateral, then upon a demand made by the Pledgor, the Secured Party will, not later than five Local Business Days after the demand, Transfer or cause its Custodian to Transfer all Posted Collateral held by it to a Custodian that satisfies those conditions or to the Secured Party if it satisfies those conditions.
(ii) the Secured Party will not be liable for the acts or omissions of the Custodian (IM); and
6(b)(iii) Liability. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions.
(iii) any obligation of the Secured Party to instruct the Custodian (IM) to transfer Posted Credit Support (IM) to the Chargor will be deemed satisfied by the Secured Party’s sending appropriate instructions to the Custodian (IM) in accordance with the terms of the Control Agreement. For the avoidance of doubt, the Secured Party will bear no liability for the failure of:
6(c) Use of Posted Collateral. Unless otherwise specified in Paragraph 13 and without limiting the rights and obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an Affected Party with respect to a Specified Condition and no Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Code, have the right to:
(A) the Custodian (IM) to comply with such instructions; or
6(c)(i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Posted Collateral it holds, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor; and
(B) the Chargor to provide matched instructions with the Secured Party to the extent required under the Control Agreement in order to give effect to such a transfer of Posted Credit Support (IM) by the Custodian (IM),
6(c)(ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a nominee for either.
and a failure to transfer Posted Credit Support (IM) to the Chargor under this Deed caused by either (A) or (B) above will not constitute an Event of Default with respect to the Secured Party.
For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the Secured Party will be deemed to continue to hold all Posted Collateral and to receive Distributions made thereon, regardless of whether the Secured Party has exercised any rights with respect to any Posted Collateral pursuant to (i) or (ii) above.
6(c) No Use of Posted Credit Support (IM). Without limiting the rights of the Secured Party under the other provisions of this Deed, the Secured Party will have no right to:
6(d) Distributions and Interest Amount.
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Posted Credit Support (IM); or
6(d)(i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later than the following Local Business Day any Distributions it receives or is deemed to receive to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose).
(ii) register any Posted Credit Support (IM) in the name of the Secured Party, its custodian or a nominee for either.
6(d)(ii) Interest Amount. Unless otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or deemed to have been paid with respect to Posted Collateral in the form of Cash (all of which may be retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times specified in Paragraph 13 the Interest Amount to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). The Interest Amount or portion thereof not Transferred pursuant to this Paragraph will constitute Posted Collateral in the form of Cash and will be subject to the security interest granted under Paragraph 2.
6(d) No Offset. For the avoidance of doubt, no delivery or return of any margin under any Other CSA will be offset against (or netted with) any Delivery Amount (IM) or Return Amount (IM).
6(e) Distributions and Interest Amount. Except as otherwise provided in this Deed, the Secured Party will have no obligation hereunder to pay or to transfer to the Chargor any amount of interest in respect of any Posted Credit Support (IM) in the form of Cash or any Distributions in respect of Posted Credit Support (IM).

Latest revision as of 13:33, 8 May 2024

2018 IM CSD

6. Custody Arrangements and the Control Agreement 6(a) General. The Custodian (IM) appointed with respect to each party as Chargor is set out in Paragraph 13. Each party as the Chargor and the other party as the Secured Party and the relevant Custodian (IM) have entered, or will, on or before the first day amounts are required to be transferred hereunder, enter into the Control Agreement regulating the rights of each party to serve instructions on the Custodian (IM). Prior to the enforcement of its rights under Paragraph 8, the Secured Party will have no right to hold (other than in accordance with Paragraph 1(b) or as otherwise agreed between the parties) and have no duty with respect to Posted Credit Support (IM), including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining to the Posted Credit Support (IM). 6(b) Custodian (IM) Risk. Unless otherwise specified in Paragraph 13 with respect to a party as the Secured Party and the other party as the Chargor: (i) the Chargor will be liable for the acts or omissions of the Custodian (IM) to the same extent that the Chargor would be liable hereunder for its own acts or omissions and any such act or omission of the Custodian (IM) will be deemed to be the act or omission of the Chargor for purposes of Paragraph 7 unless Custodian Event is specified as applicable in Paragraph 13, in which case, the consequences of any act or omission of the Custodian (IM) that constitutes a Custodian Event will be as set out in the “Custodian Event” provisions in Paragraph 13; (ii) the Secured Party will not be liable for the acts or omissions of the Custodian (IM); and (iii) any obligation of the Secured Party to instruct the Custodian (IM) to transfer Posted Credit Support (IM) to the Chargor will be deemed satisfied by the Secured Party’s sending appropriate instructions to the Custodian (IM) in accordance with the terms of the Control Agreement. For the avoidance of doubt, the Secured Party will bear no liability for the failure of: (A) the Custodian (IM) to comply with such instructions; or (B) the Chargor to provide matched instructions with the Secured Party to the extent required under the Control Agreement in order to give effect to such a transfer of Posted Credit Support (IM) by the Custodian (IM), and a failure to transfer Posted Credit Support (IM) to the Chargor under this Deed caused by either (A) or (B) above will not constitute an Event of Default with respect to the Secured Party. 6(c) No Use of Posted Credit Support (IM). Without limiting the rights of the Secured Party under the other provisions of this Deed, the Secured Party will have no right to: (i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Posted Credit Support (IM); or (ii) register any Posted Credit Support (IM) in the name of the Secured Party, its custodian or a nominee for either. 6(d) No Offset. For the avoidance of doubt, no delivery or return of any margin under any Other CSA will be offset against (or netted with) any Delivery Amount (IM) or Return Amount (IM). 6(e) Distributions and Interest Amount. Except as otherwise provided in this Deed, the Secured Party will have no obligation hereunder to pay or to transfer to the Chargor any amount of interest in respect of any Posted Credit Support (IM) in the form of Cash or any Distributions in respect of Posted Credit Support (IM).

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