Template:Isda 6(e)(i) summ: Difference between revisions

So once you have your theoretical replacement cost for each Transaction, you then have to tot up all the {{{{{1}}}|Unpaid Amount}}s that had fallen due but had not been paid under those {{{{{1}}}|Transaction}}s at the time the {{{{{1}}}|Transaction}}s terminated. These include, obviously, failures by the {{{{{1}}}|Defaulting Party}}, but also amounts the ''{{{{{1}}}|Non-defaulting Party}}'' didn’t pay when it relied on the [[flawed asset]] provision of Section {{{{{1}}}|2(a)(iii)}} to withhold amounts it would otherwise have been due to pay under the Transaction after the default but before it was terminated.<ref>There is a technical exception here for Parties under a {{1992ma}} under which the {{isda92prov|First Method}} applies. But since the {{isda92prov|First Method}} is insane and no-one in their right mind would ever have it in a live contract, we mention it only for completeness.</ref>

The close out itself happens under Section {{{{{1}}}|6(e)}} of the {{isdama}} and the recourse is to a net sum. Netting does ''not'' happen under the {{{{{1}}}|Transactions}} — on the theory of the game there are no outstanding Transactions at the point of netting; just payables.  

Therefore, if your [[credit support]] (particularly [[guarantee]]s or [[LC|letters of credit]]) explicitly reference amounts due under specific {{{{{1}}}|Transaction}}s, you may lose any credit support at precisely the point you need it.