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===Section {{ {{{1}}}|1(c)}}===
{{isda 1(c) summ {{{1}}}|{{{1}}}}}
Section {{ {{{1}}}|1(c)}} starts getting a bit tastier in that it comprises the [[Single Agreement]]. This is deep ISDA lore, from which all the [[close-out netting]] that gives the {{isdama}} its capital efficiency wings flows.
 
Here several pieces of ISDA magic come together to create the capital foundation of the {{isdama}}. The challenge was creating an architecture that allowed discrete, unitary, complete {{ {{{1}}}|Transaction}}s, such that creating a new one or terminating an old one didn’t upset the economic or legal integrity of other {{ {{{1}}}|Transaction}}s that were currently on foot, while at the same time creating an umbrella framework so that, should something regrettable happen to either party, all Transactions can be quickly rounded up, evaluated, stopped and then netted down to a single sum.
 
This latter piece involved some canny financial engineering. The general rules of [[set-off]] require not just a mutuality of parties to the off-setting claims, but also amounts falling due on the same day and in the same currency — neither of which was necessarily true of independent {{ {{{1}}}|Transaction}}s executed under an multi-currency, cross-border {{isdama}}.
 
The answer was this concept of the “{{ {{{1}}}|Single Agreement}}”: the over-arching agreement that, however independent and self-contained {{ {{{1}}}|Transaction}}s are for any other purpose, when it comes to their early termination they transmogrify themselves into the single host agreement, and are reduced to calculation inputs to the final amount which one party must pay the other. Thereby the process is not one of “[[set-off]]” at all, but of calculating a single net amount, by the {{2002ma}} being labelled the “{{ {{{1}}}|Early Termination Amount}}”, payment of which would sort out all matters outstanding under the relationship.
 
As far as we know, this concept first landed in the {{1987ma}}, where it was offhandedly referred to in the preamble, and was promoted to a fully-fledged subclause of Section 1 in the {{1992ma}}.

Latest revision as of 11:03, 29 January 2024

{{isda 1(c) summ {{{1}}}|{{{1}}}}}

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