Template:Isda Automatic Early Termination comp

Redlines

• 1987 ⇒ 1992: Redline of the ’92 vs. the ’87: comparison (and in reverse)
• 1992 ⇒ 2002: Redline of the ’02 vs. the ’92: comparison (and in reverse)
• 1987 ⇒ 2002: Redline of the ’92 vs. the ’87: comparison (and in reverse)

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Discussion

{{{{{1}}}|Automatic Early Termination}} first appeared as a named term in the 1992 ISDA. It did feature, uncredited, in the 1987 ISDA, though in this larval stage it was a blunt instrument indeed: it was mandatory and applied against every party in the case of any Bankruptcy event, regardless of the risk that party’s insolvency regime posed to the ISDA’s carefully machined close-out and netting mechanics.

The 1987 ISDA unquestionably overdid it: its generally ham-fisted approach to netting is one of many reasons most people have for a long time given it a wide berth.

By 1992, the ’squad had made some key adjustments:

• They made it an option you could elect in the Schedule, and typically only would elect against a counterparty in one of the few jurisdictions where the netting opinion required it.
• They narrowed down its scope, by excluding limbs (2) (cashflow insolvency) and (7) (contractual sequestration) of the {{{{{1}}}|Bankruptcy}} definition from its ambit.
• They also officially labelled it “{{{{{1}}}|Automatic Early Termination}}”.

Thereafter they did not change the language of {{{{{1}}}|6(a)}} between the 1992 ISDA and the 2002 ISDA, though there was an adjustment to {{{{{1}}}|bankruptcy petition}} event (Section {{{{{1}}}|5(a)(vii)(4)}} of the {{{{{1}}}|Bankruptcy}} definition), to narrow down the applicability of the grace period.