|
|
| (7 intermediate revisions by the same user not shown) |
| Line 1: |
Line 1: |
| {{isdaanat|3(c)}} | | {{nman|isda|2002|3(c)}} |
| Reference to {{isdaprov|Affiliate}}s can be controversial, particularly for [[hedge fund]] managers.
| |
| | |
| More generally, [[absence of litigation]] it is roundly pointless [[representation]], but seeing as (other than unaffiliated Hedge Fund managers) no-one really complains about it, it is best to just leave well alone. It is one for the {{t|life’s too short}} file.
| |
| | |
| But if you do see your life stretching away unendingly to the horizon, and you haven’t got anything else in the calendar in the next half hour, go west, young man. If you can’t try this:
| |
| | |
| ===[[Absence of litigation]] generally===
| |
| | |
| An [[absence of litigation]] representation seeks to address litigation carrying two particular risks:
| |
| *'''Enforceability''': Litigation that could somehow undermine or prejudice the enforceability of the agreement you are presently negotiating;
| |
| *'''Credit deterioration''': Litigation that is so monstrous that it could basically put your counterparty out of business altogether, with amounts still owing to you under the agreement you’re negotiating.
| |
| | |
| ====Enforceability-threatening litigation====
| |
| Firstly, Earth to Planet ISDA: what kind of {{tag|litigation}} or regulatory action — we presume about something unrelated to this agreement since, by your theory, ''it doesn’t damn well exist yet'' — could adversely impact in the ''enforceability'' of this future private legal {{t|contract}} between one of the litigants and an unrelated, and ignorant, third party? Seach me.
| |
| | |
| If the litigation is so material it will bankrupt the fund altogether then we have way, way bigger problems in our risk management dept, and if we are only catching that through a litigation rep, then we are properly asleep at the switch. And further more if they make this rep, and it’s wrong, how does having the rep help us?
| |
| | |
| Nonetheless, that is one for Credit/Risk. But from my perspective I have never really seen the practical value of this rep (though most clients don’t object to it for that exact reason).
| |
| | |
| | |
| {{seealso}}
| |
| *[[Representation]]
| |
2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
3(c) in a Nutshell™
|
The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here.
|
Original text
Resources and Navigation
Index: Click ᐅ to expand:
|
|
Comparisons
Section 3(c) was one of the bits of the 1992 ISDA that ISDA’s crack drafting squad™ “got mostly right” at the first time of asking. But still, some bright sparks on the ’Squad took it upon themselves, in the 2002 ISDA, to switch out reference to “Affiliates” which — I don’t know, might take in some distant half-bred cousin you don’t enormously care about and who doesn’t cast any real shadow on your creditworthiness — with “Credit Support Providers” and “Specified Entities” who no doubt more keenly do, but this leads to just more fiddliness in the Schedule over-stuffed with fiddliness, since one must then go to the trouble of specifying, and then arguing with your counterparties about, who should count as a Specified Entity for this remote and rather vacuous purpose.
Keeps the home fires burning in the hobbity shires where ISDA negotiators make their homes, we suppose.
Basics
Reference to Affiliates can be controversial, particularly for hedge fund managers.
More generally, absence of litigation is a roundly pointless representation, but seeing as (other than unaffiliated hedge fund managers) no-one complains about it, it is best to just leave well alone.
Premium content
Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇
- JC’s “nutshell” summary of the clause
- Background reading and long-form essays
-
- More information, should you want it, as to why people ask for this clause, what it is driving at, why it does not make much difference.
|
See also
References