Template:Derivatives as specified indebtedness: Difference between revisions

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 Be wary of including [[derivatives]] or other non-debt-like money payment obligations in the definition of {{isdaprov|Specified Indebtedness}}, no matter how high a {{isdaprov|Threshold Amount}}. We would say ''never'' do it, but the wise minds of the [[credit department]] may well be beyond your calming influence, so you may not have a choice. But if you have a choice, don’t do it.
-{{isdaprov|Cross Default}} aggregates up all individual defaults, so even though a single {{isdama}} would be unlikely to have a ''net'' out-of-the-money [[MTM]] of anything like 3% of shareholders’ funds, a large number of individual transactions if aggregated may, particularly if you’re selective about which transactions you’re counting — which the language entitles you to be.
+In its unadulterated formulation, {{isdaprov|Cross Default}} aggregates up all {{isdaprov|Transaction}}-level defaults, so even though a single {{isdama}} would be unlikely to have a ''net'' [[out-of-the-money]] [[MTM]] of anywhere near the {{isdaprov|Threshold Amount}}, a large number of individual {{isdaprov|Transaction}} [[MTM]]s, if aggregated, may — particularly if you’re selective about which transactions you’re counting — ''which {{isdaprov|Cross Default}} entitles you to be''.
 Thus, where you have a large number of small failures, you can still have a big problem. This is why you should also [[carve out]] [[deposit]]s: [[Operational error|operational failure]] or regulatory action can create an immediate problem, especially for banks.