Template:M summ 1992 ISDA Force Majeure Event: Difference between revisions
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===[[Force majeure]] in the {{1992ma}}=== | ===[[Force majeure]] in the {{1992ma}}=== | ||
There is no equivalent to the {{2002ma}}’s {{isdaprov|Force Majeure Event}} in the {{1992ma}}. You could, and many old-timers do, write an {{isda92prov|Impossibility}} clause | There is no equivalent to the {{2002ma}}’s {{isdaprov|Force Majeure Event}} in the {{1992ma}}. You could, and many old-timers do, write an {{isda92prov|Impossibility}} clause into the {{isda92prov|Schedule}}, which endeavoured to do the same thing. Or you could incorporate the {{2002ma}}’s {{isdaprov|Force Majeure Event}} into the {{1992ma}} — as long as you carry the concept through to its logical conclusion i.e.: | ||
*Include a {{isda92prov| | *Include a “{{isdaprov|Hierarchy of Events}}” to be clear what happens where the same event is both a {{isda92prov|Event of Default}} ''and'' a {{isda92prov|Force Majeure Event}}; | ||
*Consider the impact | *Consider the impact of a deferral on the {{isda92prov|Early Termination Amount}} etc. | ||
The concept also impacts the basis of [[ | The concept also impacts the basis of [[close-out]] because the {{2002ma}} requires true [[mid]]s for valuation i.e, not simply the average of each party’s view of the [[Bid-offer spread|bid/offer]] where a {{isda92prov|Force Majeure Event}} (or {{isda92prov|Illegality}}) occurs, which is effectively what you get under the {{1992ma}} with a “Two {{isda92prov|Affected Parties}}” option. | ||
The easiest way of achieving this is to sign up to the ISDA protocol on [http://www.isda.org/2012illegalityprot/docs/ISDA_Protocol_-_Adoption_of_2002_Illegality_FM_provisions_Final.pdf Illegality and Force Majeure]. | |||
Latest revision as of 09:55, 13 April 2020
Force majeure in the 1992 ISDA
There is no equivalent to the 2002 ISDA’s Force Majeure Event in the 1992 ISDA. You could, and many old-timers do, write an Impossibility clause into the Schedule, which endeavoured to do the same thing. Or you could incorporate the 2002 ISDA’s Force Majeure Event into the 1992 ISDA — as long as you carry the concept through to its logical conclusion i.e.:
- Include a “Hierarchy of Events” to be clear what happens where the same event is both a Event of Default and a Force Majeure Event;
- Consider the impact of a deferral on the Early Termination Amount etc.
The concept also impacts the basis of close-out because the 2002 ISDA requires true mids for valuation i.e, not simply the average of each party’s view of the bid/offer where a Force Majeure Event (or Illegality) occurs, which is effectively what you get under the 1992 ISDA with a “Two Affected Parties” option.
The easiest way of achieving this is to sign up to the ISDA protocol on Illegality and Force Majeure.