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Template:M summ 2002 ISDA 9(h): Difference between revisions
Template:M summ 2002 ISDA 9(h) (view source)
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Amwelladmin (talk | contribs) (Created page with "Section {{isdaprov|9(h)}} deals with the various scenarios where interest — over and above stated Fixed Rate and Floating Rate Options might apply to legs of a Transaction — might apply to deferred and delayed payments under the ISDA. Those scenarios are: *'''Payment default''': Someone defaults on a money payment. *'''Delivery default''': Someone defaults on an asset delivery. *'''Non-default deferral''': Some other externality intervenes to make payment impossible,...") |
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Section {{isdaprov|9(h)}} deals with the various scenarios where interest — over and above stated Fixed Rate and Floating Rate Options might apply to legs of a Transaction — might apply to deferred and delayed payments under the ISDA. Those scenarios are: | Section {{isdaprov|9(h)}} deals with the various scenarios where interest — over and above stated Fixed Rate and Floating Rate Options might apply to legs of a Transaction — might apply to deferred and delayed payments under the ISDA. Those scenarios are: | ||
'''Payment default''': Someone defaults on a money payment.<br> | |||
'''Delivery default''': Someone defaults on an asset delivery.<br> | |||
'''Non-default deferral''': Some other externality intervenes to make payment impossible, which does not amount to a default: a market disruption, a {{isdaprov|Force Majeure Event}}, a forced suspension of obligations for reasons beyond the control or fault of either party.<br> | |||
In that magically over-complicated way that is the blast signature of {{icds}}, the rate that applies to interest differs depending on the reason for it. The more | In that magically over-complicated way that is the blast signature of {{icds}}, the rate that applies to interest differs depending on the reason for it. The more “at fault” a party is, the more punitive the rate: the rates for innocent deferrals are called {{isdaprov|Applicable Deferral Rate}}s; the more punitive ones {{isdaprov|Default Rate}}s. (This by the way is one of the significant “upgrades” from the {{1992ma}}, which had a rather half-hearted penalty interest provision in Section {{isda92prov|2(e)}}). | ||
Also the calculation basis is more complicated if the deferral involves delivery of an asset, since you need a way of figuring out the market value of the asset on which interest can be said to accrue. | Also the calculation basis is more complicated if the deferral involves the delivery of an asset, since you need a way of figuring out the market value of the asset on which interest can be said to accrue. | ||
And since one kind of deferral can morph into another | And since one kind of deferral can morph into another — upon the expiry of a {{isdaprov|Waiting Period}}, for example — the exact computation of deferrals is fraught. You might even think that the ’squad’s quest for infinite exactitude in a scenario which in many cases will include a bankrupt debtor who isn’t going to pay you much of what you are owed in any case, is a bit overdone. We couldn’t possibly comment. | ||
You might even think that the ’squad’s quest for infinite exactitude in a scenario which in many cases will include a bankrupt debtor who isn’t going to pay you much of what you are owed in any case, is a bit overdone. | |||