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===[[Guarantees]] and the {{isdama}}: why {{isdaprov|Transaction}}-specific {{isdaprov|guarantee}}s don’t work=== | |||
Should a client request a {{isdaprov|transaction}}-specific parental {{isdaprov|guarantee}} (or [[letter of credit]]) for a {{isdaprov|Transaction}} under an {{isdama}} instead of the usual [[all obligations guarantee|“all obligations” guarantee]] of all the counterparty’s obligations under the {{isdama}}, hit the alarm button. | Should a client request a {{isdaprov|transaction}}-specific parental {{isdaprov|guarantee}} (or [[letter of credit]]) for a {{isdaprov|Transaction}} under an {{isdama}} instead of the usual [[all obligations guarantee|“all obligations” guarantee]] of all the counterparty’s obligations under the {{isdama}}, hit the alarm button. | ||
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On a close-out, each {{isdaprov|Transaction}} is terminated, the individual close-out amounts are determined, they’re aggregated up to a single net sum (i.e. negative exposures are netted off against positive ones) and a single {{isdaprov|Close Out Amount}} is payable with respect to ''all terminated {{isdaprov|Transactions}}'' under {{isdaprov|6(e)}} ({{isdaprov|Payments on Early Termination}}) of the {{isdama}}.<ref>The {{isdama}} itself is never actually terminated, but carries impotently on in undead twilight, roaming the badlands like [[Nosferatu]] or the [[Flying Dutchman]], unloved, unredeemed, until the [[end of days]].</ref> | On a close-out, each {{isdaprov|Transaction}} is terminated, the individual close-out amounts are determined, they’re aggregated up to a single net sum (i.e. negative exposures are netted off against positive ones) and a single {{isdaprov|Close Out Amount}} is payable with respect to ''all terminated {{isdaprov|Transactions}}'' under {{isdaprov|6(e)}} ({{isdaprov|Payments on Early Termination}}) of the {{isdama}}.<ref>The {{isdama}} itself is never actually terminated, but carries impotently on in undead twilight, roaming the badlands like [[Nosferatu]] or the [[Flying Dutchman]], unloved, unredeemed, until the [[end of days]].</ref> | ||
That is to say, payments following termination of a Transaction are *not* payable under the {{isdaprov|Transaction}} at all - they are payable under the {{isdama}} itself. Therefore, if the [[guarantee]] relates to the single {{isdaprov|Transaction}}, at the point you wish to rely on it (i.e., upon the party’s default), it will have gone, with no payment required. Vanished, like tears in the rain. <br> | That is to say, payments following termination of a Transaction are *not* payable under the {{isdaprov|Transaction}} at all - they are payable under the {{isdama}} itself. Therefore, if the [[guarantee]] relates to the single {{isdaprov|Transaction}}, at the point you wish to rely on it (i.e., upon the party’s default), it will have gone, with no payment required. Vanished, [[Tannhäuser Gate|like tears in the rain]]. <br> | ||