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| {{isdaprov|DUST}} has been expanded in five significant ways by the {{2002ma}}: | | {{isda Specified Transaction comp}} |
| *'''[[Mini-closeout]] carveout''': Defaults require the [[acceleration]] of just ''the'' {{isdaprov|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 {{isdaprov|Defaulting Party}}’s creditworthiness.
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| *'''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}}.
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| *'''Shortened [[cure period]]''': The [[cure period]] for a failure to make a final or early termination payment ona {{isdaprov|Specified Transaction}} has been reduced from three days to one.
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| *'''[[Repudiation]] evidence''': [[Repudiation]] was modified in two significant ways:
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| :*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
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| :*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.
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| *'''Widened definition of {{isdaprov|Specified Transaction}}''': The “{{isdaprov|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.
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| The [[mini closeout]] point, as we discuss in the commentary below, is technically correct but should have led to a ''simplification'' of the DUST provision, rather than a ''convolution'' of it. I know what you’re thinking, and you’re right: like ''that'' was ever going to happen.
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Latest revision as of 11:58, 24 September 2020
A Specified Transaction under the 1992 ISDA is, by the standards of ISDA’s crack drafting squad™, monosyllabic to the point of being terse. But that is as nothing compared to the 1987 ISDA, which wasn’t even called a Specified Transaction, but was just a Specified Swap.
Under the 2002 ISDA, it is expressed with far more of the squad’s signature sense of derring-do and the Byzantine, expanding the basic definition:
- ↑ Oh, look! Anyone remember Enron? Anyone feeling nostalgic for the good old days when men were men, fraud was fraud, financial accountants were profit centres and anything seemed possible? No?