Template:Isda 2(c) summ: Difference between revisions
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Section {{ | Section {{{{{1}}}|2(c)}} is about “settlement” or “payment” [[netting]] — that is, the operational settlement of offsetting payments due on any day under the normal operation of the Agreement — and not the more drastic [[close-out netting]], which is the {{{{{1}}}|Early Termination}} of all {{{{{1}}}|Transactions}} under Section {{{{{1}}}|6}}. | ||
If you want to know more about '''[[close-out netting]]''', see {{ | If you want to know more about '''[[close-out netting]]''', see {{{{{1}}}|Single Agreement}} and {{{{{1}}}|Early Termination Amount}}. | ||
We wonder what the point of this section is, since [[settlement netting]] is a factual operational process for performing existing legal obligations, rather than any kind of variation of the parties’ rights and obligations. If you owe me ten pounds and I owe you ten pounds, and we agree to both keep our tenners, what cause of action arises? What loss is there? We have settled our existing obligations differently. | |||
To be sure, if I pay you your tenner and you ''don’t'' pay me mine, that’s a different story — but then there is no [[settlement netting]] at all. The only time one would wish to enforce [[settlement netting]] it must, ipso facto, have happened, so what do you think you’re going to court to enforce? | |||
Latest revision as of 12:52, 30 December 2023
Section {{{{{1}}}|2(c)}} is about “settlement” or “payment” netting — that is, the operational settlement of offsetting payments due on any day under the normal operation of the Agreement — and not the more drastic close-out netting, which is the {{{{{1}}}|Early Termination}} of all {{{{{1}}}|Transactions}} under Section {{{{{1}}}|6}}.
If you want to know more about close-out netting, see {{{{{1}}}|Single Agreement}} and {{{{{1}}}|Early Termination Amount}}.
We wonder what the point of this section is, since settlement netting is a factual operational process for performing existing legal obligations, rather than any kind of variation of the parties’ rights and obligations. If you owe me ten pounds and I owe you ten pounds, and we agree to both keep our tenners, what cause of action arises? What loss is there? We have settled our existing obligations differently.
To be sure, if I pay you your tenner and you don’t pay me mine, that’s a different story — but then there is no settlement netting at all. The only time one would wish to enforce settlement netting it must, ipso facto, have happened, so what do you think you’re going to court to enforce?