Template:Isda 5(a)(vi) comp: Difference between revisions
Amwelladmin (talk | contribs) Created page with "The {{2002ma}} updates the {{1992ma}}’s {{isda92prov|Cross Default}} so that if the combined amount outstanding under the two limbs of {{{{{1}}}|Cross Default}} exceed the {{{{{1}}}|Threshold Amount}}, then it will be an {{{{{1}}}|Event of Default}}. Normally, under the {{1992ma}}, {{{{{1}}}|Cross Default}} requires one ''or'' the other limbs to be satisfied — you can’t add them together. This was a bit of a snafu. The two limbs are: #a default under a financial..." |
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{{drop|T|he {{2002ma}}}} updates the {{1992ma}}’s {{isda92prov|Cross Default}} so that if the combined amount outstanding under the two limbs of {{{{{1}}}|Cross Default}} exceed the {{{{{1}}}|Threshold Amount}}, then it will be an {{{{{1}}}|Event of Default}}. Normally, under the {{1992ma}}, {{{{{1}}}|Cross Default}} requires one ''or'' the other limbs to be satisfied — you can’t add them together. This was a bit of a snafu. | |||
The two limbs are: | The two limbs are: | ||
#a default under a financial agreement that would allow a creditor to [[accelerate]] any [[indebtedness]] that party owes it; | #a default under a financial agreement that would allow a creditor to [[accelerate]] any [[indebtedness]] that party owes it; | ||
#a [[failure to pay]] on the due date under such agreements after the expiry of a [[grace period]]. | #a [[failure to pay]] on the due date under such agreements after the expiry of a [[grace period]]. | ||
====Cross default in securities financing arrangements==== | |||
Neither the {{gmsla}} nor the {{gmra}} have, as standard, either a [[cross default]] or a [[default under specified transaction]] provision. ''[[Cross Default - GMSLA Provision|Unless some bright spark thinks it is a good idea to negotiate one in]].'' | |||
====Comaprison with cross acceleration==== | |||
Cross acceleration is essentially cross default only tweaked such that it is only triggered on actual acceleration of 3rd party indebtedness rather than the mere potential for acceleration. This is enough of a difference to make it worth its own page so if you're interested in that please see {{{{{1}}}|Cross Acceleration}}. | |||
Latest revision as of 11:11, 27 October 2024
The 2002 ISDA updates the 1992 ISDA’s Cross Default so that if the combined amount outstanding under the two limbs of {{{{{1}}}|Cross Default}} exceed the {{{{{1}}}|Threshold Amount}}, then it will be an {{{{{1}}}|Event of Default}}. Normally, under the 1992 ISDA, {{{{{1}}}|Cross Default}} requires one or the other limbs to be satisfied — you can’t add them together. This was a bit of a snafu.
The two limbs are:
- a default under a financial agreement that would allow a creditor to accelerate any indebtedness that party owes it;
- a failure to pay on the due date under such agreements after the expiry of a grace period.
Cross default in securities financing arrangements
Neither the 2010 GMSLA nor the Global Master Repurchase Agreement have, as standard, either a cross default or a default under specified transaction provision. Unless some bright spark thinks it is a good idea to negotiate one in.
Comaprison with cross acceleration
Cross acceleration is essentially cross default only tweaked such that it is only triggered on actual acceleration of 3rd party indebtedness rather than the mere potential for acceleration. This is enough of a difference to make it worth its own page so if you're interested in that please see {{{{{1}}}|Cross Acceleration}}.