Template:Credit support annex as a credit support document: Difference between revisions

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Among the countless good examples of just how contrived, over-engineered, and fiddly ''for the sake of being fiddly'' the ISDA canon is, there is none better than the fact that a New York law [[Credit Support Annex]] ''is'' a {{{{{1}}}|Credit Support Document}}, while the English law equivalent is not. If that were not silly enough, according to User’s Guide best practice one should not designate the counterparties themselves as {{{{{1}}}|Credit Support Provider}}s to ''either'', though it unclear which portion of the sky would fall in if one did.
Among the countless good examples of just how contrived, over-engineered, and fiddly ''for the sake of being fiddly'' the ISDA canon is, there is none better than the fact that a New York law [[Credit Support Annex]] ''is'' a {{{{{1}}}|Credit Support Document}}, while the English law equivalent is not. If that were not silly enough, according to User’s Guide best practice one should not designate the counterparties themselves as {{{{{1}}}|Credit Support Provider}}s to ''either'', though it unclear which portion of the sky would fall in if one did.


A {{tag|CSA}}<ref>and its VM update, the {{vmcsa}}.</ref> is '''not''' a {{{{{1}}}|Credit Support Document}}, and you should not list it as one in {{{{{1}}}|Part 4}} of the {{{{{1}}}|Schedule}}, however satisfying it might be to do so. I mean it sounds like one, right? But no: the counterparty cannot be its own {{{{{1}}}|Credit Support Provider}}. The {{csa}} is, rather, a {{{{{1}}}|Transaction}} under the {{isdama}}. This is rather important to the whole issue of [[close-out netting]]. Deep [[ISDA lore]].
A [[CSA]]<ref>and its VM update, the {{vmcsa}}.</ref> is '''not''' a {{{{{1}}}|Credit Support Document}}, and you should not list it as one in {{{{{1}}}|Part 4}} of the {{{{{1}}}|Schedule}}, however satisfying it might be to do so. I mean it sounds like one, right? But no: the counterparty cannot be its own {{{{{1}}}|Credit Support Provider}}. The {{csa}} is, rather, a {{{{{1}}}|Transaction}} under the {{isdama}}. This is rather important to the whole issue of [[close-out netting]]. Deep [[ISDA lore]].


But the {{nycsa}} ''is'' a {{{{{1}}}|Credit Support Document}}: because it is a {{sfca}} arrangement and not a {{ttca}}, transfer of credit support under a {{nycsa}}<ref>and its VM update, the {{nyvmcsa}}.</ref> does not change the net liabilities between the parties, the {{nycsa}} (and its regulatory VM successor, the {{nyvmcsa}} is a {{{{{1}}}|Credit Support Document}} and not a transaction under the {{isdama}}. But, because the parties cannot be their own {{{{{1}}}|Credit Support Provider}}s, there are ''no'' Credit Support Providers under a New York law CSA. It is like some kind of self-animating poltergeist. Fun, huh?
But the {{nycsa}} ''is'' a {{{{{1}}}|Credit Support Document}}: because it is a {{sfca}} arrangement and not a {{ttca}}, transfer of credit support under a {{nycsa}}<ref>and its VM update, the {{nyvmcsa}}.</ref> does not change the net liabilities between the parties, the {{nycsa}} (and its regulatory VM successor, the {{nyvmcsa}} is a {{{{{1}}}|Credit Support Document}} and not a transaction under the {{isdama}}. But, because the parties cannot be their own {{{{{1}}}|Credit Support Provider}}s, there are ''no'' Credit Support Providers under a New York law CSA. It is like some kind of self-animating poltergeist. Fun, huh?

Latest revision as of 13:30, 14 August 2024

The 1995 CSA is not a {{{{{1}}}|Credit Support Document}}...

Among the countless good examples of just how contrived, over-engineered, and fiddly for the sake of being fiddly the ISDA canon is, there is none better than the fact that a New York law Credit Support Annex is a {{{{{1}}}|Credit Support Document}}, while the English law equivalent is not. If that were not silly enough, according to User’s Guide best practice one should not designate the counterparties themselves as {{{{{1}}}|Credit Support Provider}}s to either, though it unclear which portion of the sky would fall in if one did.

A CSA[1] is not a {{{{{1}}}|Credit Support Document}}, and you should not list it as one in {{{{{1}}}|Part 4}} of the {{{{{1}}}|Schedule}}, however satisfying it might be to do so. I mean it sounds like one, right? But no: the counterparty cannot be its own {{{{{1}}}|Credit Support Provider}}. The 1995 CSA is, rather, a {{{{{1}}}|Transaction}} under the ISDA Master Agreement. This is rather important to the whole issue of close-out netting. Deep ISDA lore.

But the 1994 NY CSA is a {{{{{1}}}|Credit Support Document}}: because it is a security financial collateral arrangement arrangement and not a title transfer collateral arrangement, transfer of credit support under a 1994 NY CSA[2] does not change the net liabilities between the parties, the 1994 NY CSA (and its regulatory VM successor, the 2016 NY Law VM CSA is a {{{{{1}}}|Credit Support Document}} and not a transaction under the ISDA Master Agreement. But, because the parties cannot be their own {{{{{1}}}|Credit Support Provider}}s, there are no Credit Support Providers under a New York law CSA. It is like some kind of self-animating poltergeist. Fun, huh?

  1. ↑ and its VM update, the 2016 VM CSA.
  2. ↑ and its VM update, the 2016 NY Law VM CSA.
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