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| {{manual|MI|2002|11|Section|11|medium}} | | {{nman|isda|2002|11}} |
| Observers will note that, but for the odd comma, Section {{isdaprov|11}} in the {{1992ma}} and the {{2002ma}} are identical. And deliciously brief. Not that they ''couldn’t'' be improved, of course; they just weren’t. The dear old [[Jolly Contrarian]] ''has'' improved it for you: in the panel top left.
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| ===Not covered in the {{isdaprov|Close-out}} calculation?===
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| No. The “{{isdaprov|Expenses}}” referred to in this provision would not be captured by the definition of “'''{{isdaprov|Close Out Amount}}'''” or “'''{{isdaprov|Early Termination Amount}}'''” because, [[Q.E.D.]], they arise only once that amount has been determined and the {{isdaprov|Non-Defaulting Party}} is in the process of collecting it.
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| ==={{isdaprov|Stamp Tax}} and Section {{isdaprov|4(e)}}===
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| In the limited circumstance of default, this section modifies the arrangement for who pays {{isdaprov|Stamp Tax}} as set out in Section {{isdaprov|4(e)}} (which says it is the person whose tax residence precipitates it).
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| ===Applies to {{isdaprov|Events of Default}}, ''not'' {{isdaprov|Termination Events}}===
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| This section applies only following an {{isdaprov|Event of Default}}, and not on a termination following an Termination Event. There is some [[cognitive dissonance]] there: while Events of Default in the main are meant to be more worthy of outrage than Termination Events — thereby justifying stentorian measures to recover losses and costs as a result — some {{isdaprov|Termination Events}}, and most {{isdaprov|Additional Termination Events}} — are credit- and solvency-related, thus equally deserving of the kind of opprobrium that would warrant on on-slapping of an [[indemnity]].
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| ===An [[indemnity]] is all very well ...===
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| Bear in mind, also, that your operating theory here is that your counterparty is a Defaulting Party — i.e., it is broke. So while it’s a fine thing, this [[indemnity]] might not be of much practical use.
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2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
11 in a Nutshell™
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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. You can even ask questions! Ask about it here.
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Original text
Resources and Navigation
Index: Click ᐅ to expand:
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Comparisons
Observers will note that, but for the odd comma, Section 11 in the 1992 ISDA and the 2002 ISDA are identical. And deliciously brief. Not that they couldn’t be improved, of course; they just weren’t.
Basics
An indemnity is all very well ...
Bear in mind, also, that your operating theory here is that your counterparty is a Defaulting Party — i.e., for all intents and purposes, broke. So while it’s a fine thing, this indemnity might not be of much practical use.
Is it covered in the close-out calculation?
No. The “Expenses” referred to in this provision would not be captured by the definition of “Close-out Amount”[1] or “Early Termination Amount” because, Q.E.D., they arise only once that amount has been determined and the Non-Defaulting Party is in the process of collecting it.
Stamp Tax and Section 4(e)
In the limited circumstance of default, this section modifies the arrangement for who pays Stamp Tax as set out in Section 4(e) (which says it is the person whose tax residence precipitates it).
Premium content
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- JC’s “nutshell” summary of the clause
- Background reading and long-form essays
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- Difference between Events of Default and Termination Events when it comes to Expenses
- Is it covered in the close-out calculation
- A limited modification to stamp tax arrangements
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See also
References
- ↑ Or its 1992 equivalent, “the amount determined following early termination of a Terminated Transaction”.