Template:M comp disc 2002 ISDA Close-out Amount: Difference between revisions

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{{isdacomparison}}<br>
{{isda Close-out Amount comp|isdaprov}}
A {{isdaprov|Close-out Amount}} is the replacement/termination value for a single {{isdaprov|Transaction}}, or a related group of {{isdaprov|Transaction}}s that a party calculates when closing out an ISDA, but it is not the final sum due under the {{isdama}}. Each of the determined {{isdaprov|Close-out Amount}}s feeds into the {{isdaprov|Early Termination Amount}}, which is the total net sum due under the {{isdama}} at the conclusion of the close-out process. (see Section {{isdaprov|6(e)(i)}} for more on that).
 
{{icds}} introduced the {{isdaprov|Close-out Amount}} into the {{2002ma}} to correct the total trainwreck of a close-out methodology set out in the {{1992ma}}. In the “good old days”, you valued {{isdaprov|Terminated Transaction}}s were valued according to {{isdaprov|Market Quotation}} or {{isdaprov|Loss}} and those un-intuitive and — well, flat-out ''nutso'' — “[[First Method - ISDA Provision|First]]” and “[[Second Method - ISDA Provision|Second]]” Methods. There is a “{{isda92prov|Settlement Amount}}” concept under the {{1992ma}}, but it only really relates to {{isda92prov|Market Quotation}}.

Latest revision as of 19:00, 5 January 2024

ISDA’s crack drafting squad™ introduced the Close-out Amount into the 2002 ISDA to correct the total trainwreck of a close-out methodology set out in the 1992 ISDA.

So the dirty secret is that there isn’t a “Close-out Amount” as such under a 1992 ISDA (or the 1987 ISDA) but, in places on this wiki, we’ll refer to one anyway, because it is better, more elegant, more stylish prose than

“... the amount determined following early termination of a Terminated Transaction using Market Quotation or Loss (as the case may be) and the Second Method, seeing as no-one in their right mind would agree to the First Method, under the 1992 ISDA”.

In the context of a 1992 ISDA that is what we mean by “Close-out Amount”.

Key differences

Well, there are some significant differences between Close-out Amount and Loss/Market Quotation under the 1992 ISDA, and we go into these in more detail in the premium section Close-out Amount v Loss/MQ showdown.

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