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{{a| | {{a|banking|[[File:Crossing Threshold Hope.jpg|450px|thumb|center|an equally forlorn attempt to influence matters beyond one's control]]}}This is a page about the general, generally stupid, concept of {{t|cross default}}. | ||
This is a page about the general, generally stupid, concept of {{t|cross default}}. | |||
===As a standard term in [[master trading agreement|master trading agreements]]=== | ===As a standard term in [[master trading agreement|master trading agreements]]=== | ||
For specific provisions see: | For specific provisions see: | ||
*{{isdaprov|Cross Default}} ({{tag|ISDA}}) | *{{isdaprov|Cross Default}} ({{tag|ISDA}}) | ||
*{{fbfprof|Cross Default}} ([[FBF]]) | *{{fbfprof|Cross Default}} ([[FBF]]) | ||
*'''[[Cross Default - GMSLA Provision|Stock lending and repo have no cross default]]''': Neither the {{gmsla}} nor the {{gmra}} have, as standard, either a [[cross default]] or a [[default under specified transaction]] provision. ''[[Cross Default - GMSLA Provision|Unless some bright spark thinks it is a good idea to negotiate one in]].'' | *'''[[Cross Default - GMSLA Provision|Stock lending and repo have no cross default]]''': Neither the {{gmsla}} nor the {{gmra}} have, as standard, either a [[cross default]] or a [[default under specified transaction]] provision. ''[[Cross Default - GMSLA Provision|Unless some bright spark thinks it is a good idea to negotiate one in]].'' | ||
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* [[default under specified transaction]] which references default under financial contracts which do '''not''' represent indebtedness, but only as between the two counterparties to the present contract. | * [[default under specified transaction]] which references default under financial contracts which do '''not''' represent indebtedness, but only as between the two counterparties to the present contract. | ||
Cross default is potentially a very damaging clause, as this picture to the right amply illustrates. Or would do, if there were a picture to the right. To the extent it | Cross default is potentially a very damaging clause, as this picture to the right amply illustrates. Or would do, if there were a picture to the right. To the extent it doesn’t: | ||
===Cross default=== | ===Cross default=== | ||
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*Note that [[repo]] is not considered {{isdaprov|Specified Indebtedness}}: see [[borrowed money]]. But don’t let your inner anal retentive amending the definition in your {{isdaprov|Schedule}} so that it is (even though [[repo]] is more properly dealt with by {{isdaprov|DUST}}). | *Note that [[repo]] is not considered {{isdaprov|Specified Indebtedness}}: see [[borrowed money]]. But don’t let your inner anal retentive amending the definition in your {{isdaprov|Schedule}} so that it is (even though [[repo]] is more properly dealt with by {{isdaprov|DUST}}). | ||
{{derivatives as specified indebtedness|isdaprov}} | |||
===Credit Mitigation=== | ===Credit Mitigation=== |