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| {{isdaprov|Failure to Pay}} under Section {{isdaprov|5(a)(i)}} of the {{isdama}}: where a party fails to pay or deliver on time and does not remedy before the [[grace period]] expires. The [[grace period]] for a {{2002ma}} is one {{isdaprov|Local Business Day}}; shorter than the three Local Business Days in the {{1992ma}}. This fact alone has kept a number of market counterparties on the 1992 form, nearly thirty years after it was upgraded. | | {{isda 5(a)(i) summ|isdaprov}} |
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| ===CSAs===
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| There’s a technical funny due to the American habit of insisting on a pledge-only {{nycsa}} and then designating it as a {{isdaprov|Credit Support Document}} (against the hopes and dreams of {{icds}} when it drafted the Users’ Guide, but still), and that is a failure to pay under an English law CSA is a Section {{isdaprov|5(a)(i)}} {{isdaprov|Failure to Pay or Deliver}}, whereas a failure to pay under a New York Law CSA is a Section {{isdaprov|5(a)(iii)}} {{isdaprov|Credit Support Default}}. Doth any difference it maketh? None, so far as we can see.
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| Funny old world we live in.
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| ===Payments satisfied other ways===
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| One from the [[tricks for young players]] department.
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| Say you have some awkward client who insists on a right to meet a credit support payment some other way? For example, by terminating other [[in-the-money]]
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| {{isdaprov|Transactions}}, in lieu of ponying up cold, hard, folding spondoolies. Does this convert a hardcore payment obligation into something more vapid, vague and fluffy? Something that the failure to effectively carry out doesn’t quite qualify as a {{isdaprov|Failure to Pay or Deliver}}?
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| “Look, I know I didn’t meet my [[variation margin]], but, Sir, your honour, I didn’t have to actually ''pay'' it. I was allowed to terminate something else ''in lieu''. So while I ''could'' have sorted this all out with a payment — and I think we can all agree that might have been the most sensible thing to do — and I ''was'' obliged to sort this out ''somehow'', I wasn’t ''obliged'' to sort it out ''with a payment''. Sir. Your honour.”
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| Why might this matter? Isn’t it an {{isdaprov|Event of Default}} either way? What difference does it make whether it was a {{isdaprov|Breach of Agreement}} or a {{isdaprov|Failure to Pay or Deliver}}?
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| I can already see hands shooting up from the [[ISDA ninja]]s in the front row. And yes, my little ''tricoteuses'', you are right. ''[[Grace period]]s''. That is the difference. A {{isdaprov|Failure to Pay or Deliver}} has a grace period of ''one'' day.<ref>''Three'' if you are one of those antediluvian types on a {{1992ma}}.</ref> A {{isdaprov|Breach of Agreement}} has a ''thirty'' day grace period. Even the hyenas will have given up and gone home by then.
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Failure to Pay or Deliver under Section 5(a)(i) of the ISDA Master Agreement: where a party fails to pay or deliver on time and does not remedy before the grace period expires. The grace period for a 2002 ISDA is one Local Business Day; shorter than the three Local Business Days in the 1992 ISDA. This fact alone has kept a number of market counterparties on the 1992 form, nearly thirty years after it was upgraded.
There’s a technical funny due to the American habit of insisting on a pledge-only 1994 NY CSA and then designating it as a Credit Support Document (against the hopes and dreams of ISDA’s crack drafting squad™ when it drafted the Users’ Guide, but still), and that is a failure to pay under an English law CSA is a Section 5(a)(i) Failure to Pay or Deliver, whereas a failure to pay under a New York Law CSA is a Section 5(a)(iii) Credit Support Default. Doth any difference it maketh? None, so far as we can see.
Funny old world we live in.