Template:M summ 2002 ISDA Close-out Amount: Difference between revisions

Latest revision as of 19:02, 5 January 2024

In the “good old days” of the 1992 ISDA, you valued Terminated Transactions according to Market Quotation or Loss and those un-intuitive and — well,in the case of the first, flat-out nutso — “First” and “Second” Methods. There is a “Settlement Amount” concept under the 1992 ISDA, but it only really relates to Market Quotation.

Note the prominent requirement to achieve a “reasonable” (1992 ISDA) or “commercially reasonable” (2002 ISDA) result. On what that latter lovely expression means see Barclays v Unicredit. Spoiler: it’s basically good for brokers, as long as they aren’t being total dicks.

Regrettably, the 1992 ISDA features neither an Early Termination Amount nor a Close-out Amount. The 2002 ISDA has both, which looks like rather an indulgence until you realise that they do different things.

A Close-out Amount is the termination value for a single Transaction, or a related group of Transactions that a Non-Defaulting Party or Non-Affected Party calculates while closing out an 2002 ISDA, but it is not the final, overall sum due under the ISDA Master Agreement itself. Each of the determined Transaction Close-out Amounts summed with the various Unpaid Amounts to arrive at the Early Termination Amount, which is the total net sum due under the ISDA Master Agreement after the close-out process. (See Section 6(e)(i) for more on that).

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-From the [[you'll be sorry you asked]] file. Have a butcher’s at the nutshell version on the right. If, having read that, you’re still not really feeling sorry or resentful, the full text (below) right might get your remorse radar pinging.
+{{isda Close-out Amount summ|isdaprov}}
-Note the prominent requirement to achieve a “''[[reasonable]]''” ({{1992ma}}) or “[[commercially reasonable|''commercially'' reasonable]]” ({{2002ma}}) result. On what that latter lovely expression means see {{casenote|Barclays|Unicredit}}.  Spoiler: it’s basically good for [[broker|brokers]] as long as they aren’t being total dicks.
-There are some local variations which are worth bearing in mind:
-==={{isdaprov|Close-out Amount}} and Italian counterparties===
-See for more detail, here: [[Close-out Amount - ISDA Provision/Italian counterparties|Italian counterparties]]
-===Releationship with Early Termination Amount===
-For those curious about {{isdaprov|the difference between the Early Termination Amount and the Close-out Amount}} in the {{2002ma}}, look no further than back there, along the sentence you've just read. Go on.