Template:M summ 1992 ISDA Force Majeure Event: Difference between revisions
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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 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 probably to sign up to the [[ISDA protocol]] on | The easiest way of achieving this is probably to sign up to the [[ISDA protocol]] on [[ISDA Illegality/Force Majeure Protocol|Illegality and Force Majeure]]. | ||
Revision as of 09:53, 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 probably to sign up to the ISDA protocol on Illegality and Force Majeure.