Template:Isda 5(a)(v) comp: Difference between revisions
Jump to navigation
Jump to search
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
{{{{{1}}}|DUST}} has been expanded in five significant ways by the {{2002ma}}: | {{{{{1}}}|DUST}} has been expanded in five significant ways by the {{2002ma}}: | ||
*Defaults require the [[acceleration]] of just ''the'' {{{{{1}}}|Specified Transaction}} in question (for ''general'' defaults) but off ''all'' outstanding transactions under the relevant [[master agreement]] (for ''[[delivery]]'' defaults). This change was made with [[repo]]s and [[stock loan]]s in mind where delivery failures under are common and do not of themselves indicate weakness in the {{{{{1}}}|Defaulting Party}}’s creditworthiness. | *'''[[mini-closeout]] carveout''': Defaults require the [[acceleration]] of just ''the'' {{{{{1}}}|Specified Transaction}} in question (for ''general'' defaults) but off ''all'' outstanding transactions under the relevant [[master agreement]] (for ''[[delivery]]'' defaults). This change was made with [[mini-close-out]] under [[repo]]s and [[stock loan]]s in mind — a concept which the stock loan market invented after the {{1992ma}} was published, so you can’t really blame {{icds}} for overlooking it at first — where delivery failures under are common and do not of themselves indicate weakness in the {{{{{1}}}|Defaulting Party}}’s creditworthiness. | ||
*{{isdaprov|DUST}} under the {{2002ma}} can be triggered by default under a [[credit support arrangement]] relating to a {{isdaprov|Specified Transaction}}. These weren’t included for the {{1992isda}} {{isda92prov|DUST}}. | *'''Credit support failures covered''': {{isdaprov|DUST}} under the {{2002ma}} can be triggered by default under a [[credit support arrangement]] relating to a {{isdaprov|Specified Transaction}}. These weren’t included for the {{1992isda}} {{isda92prov|DUST}}. | ||
*The [[cure period]] for a failure to make a final or early termination payment ona {{{{{1}}}|Specified Transaction}} has been reduced from three days to one. | *'''Shortened [[cure period]]''': The [[cure period]] for a failure to make a final or early termination payment ona {{{{{1}}}|Specified Transaction}} has been reduced from three days to one. | ||
*[[Repudiation]] was modified in two significant ways: | *'''[[Repudiation]] evidence''': [[Repudiation]] was modified in two significant ways: | ||
:*The phrase “or challenges the validity of” was added after “disaffirms, disclaims, repudiates or rejects” to reduce ambiguity as to whether a party’s action constitutes a repudiation; and | :*The phrase “or challenges the validity of” was added after “disaffirms, disclaims, repudiates or rejects” to reduce ambiguity as to whether a party’s action constitutes a repudiation; and | ||
:* | :*to stiffen the criteria for something to count as a [[repudiation]] so as to require [[In writing|written evidence]] from the repudiating party of its [[extended middle finger]]. This is really an articulation of common sense, for it would be a brave risk officer indeed who closed out an {{isdama}} based on an oral communication, or the [[proverbial extended middle finger]], for which she could not subsequently produce in fairly compelling evidence. But still. | ||
*'''Widened definition of {{{{{1}}}|Specified Transaction}}''': The “{{{{{1}}}|Specified Transaction}}” concept has been broadened to include additional transaction types such as repos, and to include a catchall clause designed to include any future derivative products that have not been thought of yet. | |||
Revision as of 11:00, 24 September 2020
{{{{{1}}}|DUST}} has been expanded in five significant ways by the 2002 ISDA:
- mini-closeout carveout: Defaults require the acceleration of just the {{{{{1}}}|Specified Transaction}} in question (for general defaults) but off all outstanding transactions under the relevant master agreement (for delivery defaults). This change was made with mini-close-out under repos and stock loans in mind — a concept which the stock loan market invented after the 1992 ISDA was published, so you can’t really blame ISDA’s crack drafting squad™ for overlooking it at first — where delivery failures under are common and do not of themselves indicate weakness in the {{{{{1}}}|Defaulting Party}}’s creditworthiness.
- Credit support failures covered: DUST under the 2002 ISDA can be triggered by default under a credit support arrangement relating to a Specified Transaction. These weren’t included for the 1992 ISDA DUST.
- Shortened cure period: The cure period for a failure to make a final or early termination payment ona {{{{{1}}}|Specified Transaction}} has been reduced from three days to one.
- Repudiation evidence: Repudiation was modified in two significant ways:
- The phrase “or challenges the validity of” was added after “disaffirms, disclaims, repudiates or rejects” to reduce ambiguity as to whether a party’s action constitutes a repudiation; and
- to stiffen the criteria for something to count as a repudiation so as to require written evidence from the repudiating party of its extended middle finger. This is really an articulation of common sense, for it would be a brave risk officer indeed who closed out an ISDA Master Agreement based on an oral communication, or the proverbial extended middle finger, for which she could not subsequently produce in fairly compelling evidence. But still.
- Widened definition of {{{{{1}}}|Specified Transaction}}: The “{{{{{1}}}|Specified Transaction}}” concept has been broadened to include additional transaction types such as repos, and to include a catchall clause designed to include any future derivative products that have not been thought of yet.