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Template:20 days notice ISDA: Difference between revisions
→“by not more than 20 days’ notice”
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===“by | ====“by not more than 20 days’ notice”==== | ||
What is the significance of the ''maximum'' [[Notice - ISDA Provision|notice period]] of '''20 days''' that one may use to close out the {{isdama}}? Poor defaulted Counterparty is in pieces, on its knees, bleeding out, but really, as long as it gets ''some'' notice, does it really care how much? Surely, the longer the period, the more hope you have? While the agreement remains ''in'' termination but ''un''-terminated, ''en route'' to that crater in the ground ''but not there yet'' — the chance remains, however remote, that things will come right; that ''you'', its counterparty, will see sense, or unexpectedly discover the one compassionate bone in your body that, until now, has gone wholly unnoticed and, in a cloying bout of clemency, will change your mind and withdraw your notice of termination? Well, a little [[hedge fund]] can dream, can’t it? So why deprive it, and yourself, of that option? | What is the significance of the ''maximum'' [[Notice - ISDA Provision|notice period]] of '''20 days''' that one may use to close out the {{isdama}}? Poor defaulted Counterparty is in pieces, on its knees, bleeding out, but really, as long as it gets ''some'' notice, does it really care how much? Surely, the longer the period, the more hope you have? While the agreement remains ''in'' termination but ''un''-terminated, ''en route'' to that crater in the ground ''but not there yet'' — the chance remains, however remote, that things will come right; that ''you'', its counterparty, will see sense, or unexpectedly discover the one compassionate bone in your body that, until now, has gone wholly unnoticed and, in a cloying bout of clemency, will change your mind and withdraw your notice of termination? Well, a little [[hedge fund]] can dream, can’t it? So why deprive it, and yourself, of that option? | ||
====I teach you the {{cotw}}==== | ====I teach you the {{cotw}}==== | ||
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'''This is very important'''. This means<ref>Arguably unless you’re on a {{1992ma}} and using {{isda92prov|Market Quotation}} — see the footnote above.</ref> you don’t have to liquidate a portfolio in its entirety within 20 days, or even take the values as of that {{{{{1}}}|Early Termination Date}}. If you can, you should — but it may well not be commercially reasonable — or even possible — to. The [[Lehman]] insolvency took ''months'' to unwind. Note also that [[commercial reasonableness]] is viewed from the Non-Affected Party’s perspective. It is not a licence to do whatever the hell you want — but the court won’t second guess prudent application of your own models. | '''This is very important'''. This means<ref>Arguably unless you’re on a {{1992ma}} and using {{isda92prov|Market Quotation}} — see the footnote above.</ref> you don’t have to liquidate a portfolio in its entirety within 20 days, or even take the values as of that {{{{{1}}}|Early Termination Date}}. If you can, you should — but it may well not be commercially reasonable — or even possible — to. The [[Lehman]] insolvency took ''months'' to unwind. Note also that [[commercial reasonableness]] is viewed from the Non-Affected Party’s perspective. It is not a licence to do whatever the hell you want — but the court won’t second guess prudent application of your own models. | ||
====Therefore no-one has any reason to wait ''any'' days, let alone 20==== | ====Therefore no-one has any reason to wait ''any'' days, let alone 20==== | ||
So this leaves the mystery of ''why'' a party designating an {{{{{1}}}|Early Termination Date}}, for any reason, wouldn’t just designate it ''now'' — and for those peculiar types who don’t want to do that, why there should be this arbitrary long-stop of 20 days. | So this leaves the mystery of ''why'' a party designating an {{{{{1}}}|Early Termination Date}}, for any reason, wouldn’t just designate it ''now'' — and for those peculiar types who don’t want to do that, why there should be this arbitrary long-stop of 20 days. | ||