Template:Csa legally ineligible credit support: Difference between revisions

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===No such concept in the {{csa}} or the {{1994csa}}===
===No such concept in the {{csa}} or the {{1994csa}}===
Concerning as it does ''legal'' and not ''contractual'' ineligibility of credit support, and that being a function of criteria imposed by regulators on ones ''mandatory'' obligations to post and collect margin, which did not exist before 2016, it is hardly surprising the distant ancestors of {{icds}} didn’t anticipate the need for this clause, which is convoluted, and you can avoid the need for entirely should you post [[cash]] in a sensible currency.
Concerning as it does ''legal'' and not ''contractual'' ineligibility of [[credit support]], and that being a function of criteria imposed by regulators on one’s ''mandatory'' obligations to post and collect [[Variation margin|margin]], which did not exist before 2016, it is hardly surprising {{icds}} of yore didn’t anticipate the need for this clause, which is convoluted, finnicky, and you can avoid the need for it entirely, should you post [[cash]] in a sensible [[currency]].
 
===Difference between {{vmcsa}} and {{nyvmcsa}}===
===Difference between {{vmcsa}} and {{nyvmcsa}}===
In most respects they are identical (with references to {{vmcsaprov|Transferor}} and {{vmcsaprov|Transferee}} switched to {{nyvmcsaprov|Pledgor}} and {{nyvmcsaprov|Secured Party}}. There are two technical differences, for completists:
In most respects they are identical (with references to {{vmcsaprov|Transferor}} and {{vmcsaprov|Transferee}} switched to {{nyvmcsaprov|Pledgor}} and {{nyvmcsaprov|Secured Party}}. There are two technical differences, for completists:
*The exception in the {{vmcsa}} for {{vmcsaprov|Legally Ineligible Credit Support}} counting as {{vmcsaprov|Eligible Credit Support}} for the purpose of {{vmcsaprov|Credit Support Balance}} and {{vmcsaprov|Equivalent Credit Support}}. This is because, being a {{ttca}}, even though it is worth zero ''for the purposes of discharging one’s regulatory obligation to collect and return collateral'', in the ''real'' world it is still worth something, and the {{vmcsaprov|Transferee}} still has to give it back, even if that has no effect on [[Value - VM CSA Provision|valuations]] under the {{vmcsa}}. With a {{nyvmcsa}} since the {{nyvmcsaprov|Secured Party}} never<ref>Ahem [[Use of Posted Collateral (VM) - NY VM CSA Provision|rehypothecation]] folks.</ref> “gets” it in the first place, the {{nyvmcsaprov|Secured Party}} doesn’t have to give it back either. (By the way, if you aren’t saying, “hey, but what about rehypothecation under Paragraph {{nyvmcsaprov|6(c)}}?” yet, you ''should'' be.)
*The exception in the {{vmcsa}} for {{vmcsaprov|Legally Ineligible Credit Support}} counting as {{vmcsaprov|Eligible Credit Support}} for the purpose of {{vmcsaprov|Credit Support Balance}} and {{vmcsaprov|Equivalent Credit Support}}. This is because, being a {{ttca}}, even though it is worth zero ''for the purposes of discharging one’s regulatory obligation to collect and return collateral'', in the ''real'' world it is still worth something, and the {{vmcsaprov|Transferee}} still has to give it back, even if that has no effect on [[Value - VM CSA Provision|valuations]] under the {{vmcsa}}. With a {{nyvmcsa}} since the {{nyvmcsaprov|Secured Party}} never<ref>Ahem [[Use of Posted Collateral (VM) - NY VM CSA Provision|rehypothecation]] folks.</ref> “gets” it in the first place, the {{nyvmcsaprov|Secured Party}} doesn’t have to give it back either. (By the way, if you aren’t saying, “hey, but what about rehypothecation under Paragraph {{nyvmcsaprov|6(c)}}?” yet, you ''should'' be.)
*The exception for valuation on {{csaprov|Default}} — that flows from the fundamental difference between the {{vmcsa}} a {{ttca}} which is a {{isdaprov|Transaction}} under the {{isdama}} and the {{nyvmcsa}} which is a {{sfca}} which is only a {{isdaprov|Credit Support Document}} under the {{isdama}}. <br>
*The exception for valuation on {{csaprov|Default}} — that flows from the fundamental difference between the {{vmcsa}} a {{ttca}} which is a {{isdaprov|Transaction}} under the {{isdama}} and the {{nyvmcsa}} which is a {{sfca}} which is only a {{isdaprov|Credit Support Document}} under the {{isdama}}. <br>

Revision as of 15:47, 17 January 2020

No such concept in the 1995 CSA or the 1994 NY CSA

Concerning as it does legal and not contractual ineligibility of credit support, and that being a function of criteria imposed by regulators on one’s mandatory obligations to post and collect margin, which did not exist before 2016, it is hardly surprising ISDA’s crack drafting squad™ of yore didn’t anticipate the need for this clause, which is convoluted, finnicky, and you can avoid the need for it entirely, should you post cash in a sensible currency.

Difference between 2016 VM CSA and 2016 NY Law VM CSA

In most respects they are identical (with references to Transferor and Transferee switched to Pledgor and Secured Party. There are two technical differences, for completists:

  1. Ahem rehypothecation folks.