Template:Isda 2(a)(iii) summ: Difference between revisions

Template:Isda 2(a)(iii) summ (view source)

Revision as of 20:08, 2 March 2022

505 bytes added , 2 March 2022

no edit summary

Amwelladmin

Bureaucrats, Interface administrators, Administrators

82,975

edits

@@ Line 8: / Line 8: @@
 What, for the purpose of close-out valuations, is the status of payments that ''were'' made, but that were not ''required'' to be made? Are these some kind of negative energy in the close-out spacetime; dark matter, a kind of inverted {{isdaprov|Unpaid Amount}}?<ref>Okay I am having a bit of fun with you here I confess.</ref>
-The other one is practical. In times of market dislocation all kinds of things can go wrong. People suddenly instigate to manual processes stopping and frisking money on its way out the door. For all you know ''your correspondent bank may be doing this without your knowledge''<ref>This is not nearly as unlikely as it seems: in a widespread market dislocation, or where sanctions are involved (hello Ukraine conflict!) expect everyone to be terrified of getting anything wrong. ''Everything'' will slow down.</ref>  Counterparties make oral arrangements to check payments in before sending anything out — there is all klnds of paranoia, fear & loathing. It’s great. Sometimes payments — going on either direction — can get hung up, stuck, blocked, sanctioned, or — who knows? — waived, or suspended by mutual consent, or even suspended by ''implication'': let’s say the parties agree (or ''think'' they agree) to manually net settlement of payments usually made gross.
+The other one is practical. In times of market dislocation all kinds of things can go wrong. People suddenly instigate to manual processes. They start frisking all money payments on their way out the door. For all you know ''your correspondent bank may be doing this without your knowledge''. Payments you thought you had made may not have got to your counterparty.<ref>This is not nearly as unlikely as it seems: in a widespread market dislocation, for example, where sanctions are involved (hello Ukraine conflict!) expect ''everyone'' to be terrified of getting anything wrong. ''Everything'' will slow down.</ref>  Counterparties make oral arrangements to check payments in before sending anything out — expect all kinds of paranoia, fear & loathing. It’s great. Sometimes payments — going in either direction — can get hung up, stuck, blocked, sanctioned, or — who knows? — waived, or suspended by mutual consent, or even suspended by ''implication'': the parties may agree (or ''think'' they have agreed) to net settle payments usually made gross. If there is a misunderstanding —
-It is not always certain whether payments have, in fact, been missed. This kind of uncertainty becomes most likely ''exactly at a time of stress''. What effect do these actions have?
+In short, it is not always certain whether payments have, in fact, been made, or missed. You would think this sort of thing would be determinate, but it isn’t. And this kind of uncertainty is more likely ''exactly at a time of stress''.
-This can lead to some unfortunate surprises: the counterparty who files a notice of {{{{{1}}}|Failure to Pay or Deliver}}, only to find that, last week some clot in Collateral Ops mis-keyed a small yen payment, meaning that none of the payments it now sees as failing were even due in the first place.
+This can lead to some unfortunate surprises: the counterparty who, faced with a massive counterparty failure, and diligently files its notice of {{{{{1}}}|Failure to Pay or Deliver}}, only to find that, last week some clot in Collateral Ops mis-keyed a small yen payment or just effected a net settlement that the counterparty didn’t match, meaning that none of the “failing payments” were actually due in the first place. Expect a race back in time to see who committed the earliest unremedied non-payment.
+None of this you will enjoy when, as it will, it happens just as the world has lost its head and is blaming it on you.
 ===...These days?===