Flawed asset: Difference between revisions

Flawed asset (view source)

Revision as of 10:20, 28 June 2019

862 bytes removed , 28 June 2019

no edit summary

Amwelladmin

Bureaucrats, Interface administrators, Administrators

83,371

edits

@@ Line 1: / Line 1: @@
 {{anat|security|}}You’ll be most likely wanting to see the discussion on this wonderfully baffling subject under Section {{isdaprov|2(a)(iii)}} of the {{isdama}}. But see also the [[extended liens]] case, which discusses “rare cases in which security rights fall wholly outside the recognised categories of [[lien]], [[pledge]], [[mortgage]] or [[charge]], and into a residual, purely [[contractual interest|contractual]], category sometimes categorised as turning the grantor’s property into a form of ‘[[flawed asset]]’.”
-More generally, following an [[event of default]], a [[flawed asset]] provision allows an innocent, but [[out-of-the-money]] party to a {{tag|derivative}} or {{tag|securities finance}} transaction to suspend performance of its obligations without terminating the transaction and thereby crystallising a [[mark-to-market]] loss.
+{{flawed asset capsule}}
-The asset – a right to payment under the transaction – is “flawed” in the sense that it only become payable ''if the conditions precedent to payment are fulfilled''.
-Section {{isdaprov|2(a)(iii)}} entered the argot in a simpler, more peaceable time, when zero threshold, daily margined {{tag|CSA}}s were an uncommon, rather fantastical sight. They’re more or less obligatory now – indeed, once regulatory [[uncleared margin]] is a thing they ''will'' be obligatory – so it’s hard to see the justification for a [[flawed asset]] provision.
 ===Master trading agreements===