Template:Difference between Affected Party and Defaulting Party: Difference between revisions
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) |
||
| Line 1: | Line 1: | ||
===The | ===The practical difference between an “Affected Party” and a “Defaulting Party”=== | ||
What is the practical, economic difference between being closed out on the same {{{{{1}}}|Transaction}} for an {{{{{1}}}|Event of Default}} and a {{{{{1}}}|Termination Event}}? | What is the practical, economic difference between being closed out on the same {{{{{1}}}|Transaction}} for an {{{{{1}}}|Event of Default}} and a {{{{{1}}}|Termination Event}}? | ||
This is something that all [[ISDA ninja]]s know, or sort of intuit, in a sort of semi-conscious, buried-somewhere-deep-in-the-brain-stem kind of way, but they may mutter darkly and try to change the subject if you ask them to articulate it in simple English. | |||
To be fair the topic might be chiefly of academic interest were it not for the unfortunate habit of the same “real world” event potentially comprising more than one variety of termination right. This leads to some laboured prioritisation in the ISDA, and sometimes some in the Schedule too. What if my {{{{{1}}}|Tax Event upon Merger}} is also a {{{{{1}}}|Credit Event Upon Merger}} and, for that matter, also a {{{{{1}}}|Force Majeure Event}}? That kind of question. | |||
Premium readers can read about it [[pjc:Affected Party|here]] in our premium edition. | |||
Revision as of 15:25, 29 May 2023
The practical difference between an “Affected Party” and a “Defaulting Party”
What is the practical, economic difference between being closed out on the same {{{{{1}}}|Transaction}} for an {{{{{1}}}|Event of Default}} and a {{{{{1}}}|Termination Event}}?
This is something that all ISDA ninjas know, or sort of intuit, in a sort of semi-conscious, buried-somewhere-deep-in-the-brain-stem kind of way, but they may mutter darkly and try to change the subject if you ask them to articulate it in simple English.
To be fair the topic might be chiefly of academic interest were it not for the unfortunate habit of the same “real world” event potentially comprising more than one variety of termination right. This leads to some laboured prioritisation in the ISDA, and sometimes some in the Schedule too. What if my {{{{{1}}}|Tax Event upon Merger}} is also a {{{{{1}}}|Credit Event Upon Merger}} and, for that matter, also a {{{{{1}}}|Force Majeure Event}}? That kind of question.
Premium readers can read about it here in our premium edition.