Template:Csa Rights and Remedies summ: Difference between revisions
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{{Csa Rights and Remedies summ {{{1}}}|{{{1}}}}} | {{Csa Rights and Remedies summ {{{1}}}|{{{1}}}}} | ||
====Deficiencies and Excess Proceeds==== | |||
All versions do the same thing: Once the security has been exercised, proceeds realised and the outstanding amount due settled, the {{{{{1}}}|Secured Party}} must return any excess of the realised proceeds to the posting party, and if there is a shortfall after the security has been realised and applied against the debt, the posting party remains liable for it. This is all good standard security-taking stuff. | |||
====Final Returns==== | ====Final Returns==== | ||
All versions get to more or less the | All versions get to more or less the same place: Once all {{{{{1}}}|Obligation}}s are fully settled (with an exception for {{isdaprov|Tax}}es — we suppose because they could be imposed retrospectively, so it’s impossible to discharge them definitively — the {{{{{1}}}|Secured Party}} has to give the {{{{{1}}}|Posted Credit Support}} back. | ||
This ought to happen automatically where we are talking about [[variation margin]] — [[Q.E.D.]], if your {{{{{1}}}|Obligation}}s are all settled you have no {{{{{1}}}|Exposure}} so your counterparty has no grounds to hold {{{{{1}}}|Posted Credit Support}} — but for {{{{{1}}}|Independent Amount}}s or initial margin posted under an {{imcsd}}, this is not necessarily the case: the CSA itself might specify an ''independent'' {{{{{1}}}|Independent Amount}} that is not conditional on any {{{{{1}}}|Transaction}}. (This is not how most dealers handle [[initial margin]] on their swaps — it tends to be {{{{{1}}}|Transaction}}-specific — but this is how the original CSAs were conceived at the time of the [[First Men]].) | |||
Latest revision as of 15:48, 9 May 2024
{{Csa Rights and Remedies summ {{{1}}}|{{{1}}}}}
Deficiencies and Excess Proceeds
All versions do the same thing: Once the security has been exercised, proceeds realised and the outstanding amount due settled, the {{{{{1}}}|Secured Party}} must return any excess of the realised proceeds to the posting party, and if there is a shortfall after the security has been realised and applied against the debt, the posting party remains liable for it. This is all good standard security-taking stuff.
Final Returns
All versions get to more or less the same place: Once all {{{{{1}}}|Obligation}}s are fully settled (with an exception for Taxes — we suppose because they could be imposed retrospectively, so it’s impossible to discharge them definitively — the {{{{{1}}}|Secured Party}} has to give the {{{{{1}}}|Posted Credit Support}} back.
This ought to happen automatically where we are talking about variation margin — Q.E.D., if your {{{{{1}}}|Obligation}}s are all settled you have no {{{{{1}}}|Exposure}} so your counterparty has no grounds to hold {{{{{1}}}|Posted Credit Support}} — but for {{{{{1}}}|Independent Amount}}s or initial margin posted under an 2018 English law IM CSD, this is not necessarily the case: the CSA itself might specify an independent {{{{{1}}}|Independent Amount}} that is not conditional on any {{{{{1}}}|Transaction}}. (This is not how most dealers handle initial margin on their swaps — it tends to be {{{{{1}}}|Transaction}}-specific — but this is how the original CSAs were conceived at the time of the First Men.)