Template:Csa Security summ

Paragraph 2(a) Covenant to Perform

What is the point of the “covenant to perform”? Unless there is a third-party security trustee involved — common in asset-backed securities, for example — who is not a direct benefit of the covenant to perform then you already have a covenant in the ISDA itself. After all, the whole contract is a mutual covenant to perform. The reasons are partly habitual, belts-and-braces sort of stuff, partly practical and partly the deep magic from which the idea of security sprang in the primordial beginnings of the common law. The practical one is that the English law CSD is, of course, a contract executed as a deed — a “specialty” in the odd language of Section 8 of the Limitation Act 1980 — thereby earning you a 12-year limitation period, quite an upgrade on the 6-year period you get under the non-specialty ISDA Master Agreement, being indebtedness incurred under a “simple contract”.

Now what exactly would you be doing to omit to file a claim under a failed credit support arrangement for 6 months, let alone six years, it is hard to say, so this may seem like a peripheral benefit for all but the truly disorganised — but seeing as you’re signing as a specialty, and the benefit is there for the taking, Casanova’s prerogative applies. Stick it in. No-one will argue about it.

Paragrpah 2(c) Restrictions on Dealings

JC wouldn’t normally get excited about a clause as quotidian is this but it, brings uncommon joy to be the one to point out the references to “clearing systems”. Elsewhere in this Deed — for example, in the definition of Assigned Rights, we find the ’squad carelessly referring to “clearance systems”.

In a document as tediously, fastidiously, anal-retentively-drafted as this one is — the 2018 English law IM CSD really sets a benchmark, even amongst ISDA documents — this will not do.