Settlement Day - CSA Provision

ISDA 1995 English Law Credit Support Annex A Jolly Contrarian owner’s manual™ Go premium Overview — Summary — Premium — See also — Wikitext Crosscheck: →NY OG →Eng OG →NY VM →EngVM →Eng IM Settlement Day 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. Original text: “Settlement Day” means, in relation to a date, (i) with respect to a transfer of cash or other property (other than securities), the next Local Business Day and (ii) with respect to a transfer of securities, the first Local Business Day after such date on which settlement of a trade in the relevant securities, if effected on such date, would have been settled in accordance with customary practice when settling through the clearance system agreed between the parties for delivery of such securities or, otherwise, on the market in which such securities are principally traded (or, in either case, if there is no such customary practice, on the first Local Business Day after such date on which it is reasonably practicable to deliver such securities). The varieties of ISDA CSA Subject 1994 NY 1995 Eng 2016 VM NY 2016 VM Eng 2018 IM Eng Preamble Pre Pre Pre Pre Pre Interpretation 1 1 1 1 1 Security Interest 2 - 2 - 2 Credit Support Obligations 3 2 3 2 3 Transfers, Calculations and Exchanges - 3 - 3 - Conditions Precedent, Transfer Timing, Calculations and Substitutions 4 - 4 - 4 Dispute Resolution 5 4 5 4 5 Holding and Using Posted Collateral 6 - 6 - 6 Transfer of Title, No Security Interest - 5 - 5 - Events of Default 7 6 7 6 7 Rights and Remedies 8 - 8 - 8 Representations 9 7 9 7 9 Expenses 10 8 10 8 10 Miscellaneous 11 9 11 9 11 Definitions 12 10 12 10 12 Elections and Variables 13 11 13 11 13 Resources and Navigation Index: Click ᐅ to expand: 1994 NY CSA 1995 CSA 2016 VM CSA

Overview

Key difference here is that a conventional 1995 CSA has settlement happening the next Local Business Day after a demand has made; the 2016 VM CSA has “Regular Settlement Day” which happens on the same Local Business Day.

Summary

OG CSAs

The Settlement Day is the day on which the Transfer of Eligible Credit Support has to land by. It can be a surprisingly long time after the demand was made, if you happen to be delivering odd securities traded on some weird market — that is less likely to be a thing now in these days of cash-collateralised VM CSAs of course, but for the OG CSAs it was a least possible.

Modern CSAs

The Settlement Day does not do much lifting in the 2016 VM CSA — the heavy lifting role has been largely usurped by the new Regular Settlement Day.

Which is mighty confusing, since the “Regular Settlement Day” in the new VM CSA is the same as the “Settlement Day” in the old one, but there is also a “Settlement Day” in the new CSA, which isn’t anything like the old one and is really only there for voluntary exchanges of already collateral under 3(c) — hardly a big deal since you’ll mainly be posting cash anyway — and distributions of interest and income under 5(c)(i).

ISDA’s crack drafting squad™ no doubt had its priorities and imperatives to achieve here — who doesn’t? — but they don’t seem to have had much to do with helping beleaguered doc-jocks understand what is going on.

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See also

• Regular Settlement Day
• Valuation Date