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The right to terminate a {{tag|master agreement}} as a result of the decline in [[net asset value]] of a [[hedge fund]] counterparty | The right to terminate a {{tag|master agreement}} as a result of the decline in [[net asset value]] of a [[hedge fund]] counterparty (other counterparty types generally won't have a “[[net asset value]]” ''to'' trigger). | ||
In practice an official [[NAV]] is only “cut” once for every “[[liquidity period]]”, and it is hard to see how a [[credit officer]], however enthusiastic, could | Often there are three levels of trigger: '''Monthly'''; '''Quarterly''' and '''Annually'''. You may find yourself embraced in a tedious argument about whether these should be “rolling” (that is, judged for the period from any day) or “point-to-point” (that is, judged from a defined day to the end of the period following that day). | ||
In practice an official [[NAV]] is only “cut” once for every “[[liquidity period]]”, and it is hard to see how a [[credit officer]], however enthusiastic, could determine what the [[net asset value]] was at any other time. On the other hand, [[credit officer]]s don’t usually monitor NAV triggers anyway, so what do they care? | |||
All rather tiresome, and quite unnecessary if you have the right, as most [[prime broker]]s do, to jack up [[initial margin]] at your discretion<ref>I know, I know, there may be a [[margin lockup]].</ref>. | All rather tiresome, and quite unnecessary if you have the right, as most [[prime broker]]s do, to jack up [[initial margin]] at your discretion<ref>I know, I know, there may be a [[margin lockup]].</ref>. |