Template:Isda Additional Termination Event summ: Difference between revisions

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These are the ''other'' termination events your [[Credit officer|Credit department]] has dreamt up for this specific counterparty, that didn’t occur to the framers of the {{isdama}} — or, at any rate, weren’t sufficiently universal to warrant being included in the {{isdama}} for all. While the standard {{{{{1}}}|Termination Events}} tend to be “non-fault” events which justify termination of the relationship on economic grounds, but not on terms necessarily punitive to the {{{{{1}}}|Affected Party}}, Additional Termination Events are more “credity”, more susceptible of moral outrage, and as such more closely resemble {{{{{1}}}|Events of Default}} than {{{{{1}}}|Termination Events}}.
{{{{{1}}}|Additional Termination Event}}s are the ''other'' termination events your [[Credit officer|Credit department]] has dreamt up for this specific counterparty, that didn’t occur to the framers of the {{isdama}} — or, at any rate, weren’t sufficiently universal to warrant being included in the {{isdama}} for all. While the standard {{{{{1}}}|Termination Events}} tend to be “non-fault” events which justify termination of the relationship on economic grounds, but not on terms necessarily punitive to the {{{{{1}}}|Affected Party}}, {{{{{1}}}|Additional Termination Event}}s are more “credit-y”, more susceptible of moral outrage, and as such more closely resemble {{{{{1}}}|Events of Default}} than {{{{{1}}}|Termination Events}}.


===Examples===
Common ones include:
Common ones include:


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*Parent divestment (where counterparty is a financing subsidiary)
*Parent divestment (where counterparty is a financing subsidiary)


===All they are cracked up to be?===
There is a — well, ''contrarian'' — school of thought that {{{{{1}}}|Additional Termination Event}}s better serve the interests of the [[Negotiator|Ancient Guild of Contract Negotiators]] and the [[Credit officer|Worshipful Company of Credit Officers]] than they do the shareholders of the institutions for whom these artisans practise their craft, for in these days of [[Threshold - CSA Provision|zero-threshold]] [[CSA|CSAs]], the ''real'' credit protections in the {{isdama}} are the standard {{{{{1}}}|Events of Default}} (especially {{{{{1}}}|Failure to Pay or Deliver}} and {{{{{1}}}|Bankruptcy}}).
There is a school of thought that Additional Termination Events better serve the interests of the [[Negotiator|Ancient Guild of Contract Negotiators]] and the [[Credit officer|Worshipful Company of Credit Officers]] than they do the shareholders of the institutions for whom these artisans practise their craft, for in these days of [[Threshold - CSA Provision|zero-threshold]] [[CSA|CSAs]], the real credit protections in the {{isdama}} are the standard {{{{{1}}}|Events of Default}} (especially {{{{{1}}}|Failure to Pay or Deliver}} and {{{{{1}}}|Bankruptcy}}).


It’s a fair bet no-one in the organisation will have kept a record of how often you pulled [[NAV trigger]]. It may well be ''never''.  
It’s a fair bet no-one in the organisation will have kept a record of how often you pulled [[NAV trigger]]. It may well be ''never''.  

Latest revision as of 17:13, 29 December 2023

{{{{{1}}}|Additional Termination Event}}s are the other termination events your Credit department has dreamt up for this specific counterparty, that didn’t occur to the framers of the ISDA Master Agreement — or, at any rate, weren’t sufficiently universal to warrant being included in the ISDA Master Agreement for all. While the standard {{{{{1}}}|Termination Events}} tend to be “non-fault” events which justify termination of the relationship on economic grounds, but not on terms necessarily punitive to the {{{{{1}}}|Affected Party}}, {{{{{1}}}|Additional Termination Event}}s are more “credit-y”, more susceptible of moral outrage, and as such more closely resemble {{{{{1}}}|Events of Default}} than {{{{{1}}}|Termination Events}}.

Common ones include:

There is a — well, contrarian — school of thought that {{{{{1}}}|Additional Termination Event}}s better serve the interests of the Ancient Guild of Contract Negotiators and the Worshipful Company of Credit Officers than they do the shareholders of the institutions for whom these artisans practise their craft, for in these days of zero-threshold CSAs, the real credit protections in the ISDA Master Agreement are the standard {{{{{1}}}|Events of Default}} (especially {{{{{1}}}|Failure to Pay or Deliver}} and {{{{{1}}}|Bankruptcy}}).

It’s a fair bet no-one in the organisation will have kept a record of how often you pulled NAV trigger. It may well be never.

“Ahh”, your credit officer will say, “but it gets the counterparty to the negotiating table”.

Hmmm.

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