Template:Failure to pay procedure: Difference between revisions

Jump to navigation Jump to search
No edit summary
No edit summary
Line 1: Line 1:
===[[Closing out]] an {{isdama}} following an {{isdaprov|Event of Default}}===
===[[Closing out]] an {{isdama}} following an {{isdaprov|Event of Default}}===
Here is the [[JC]]’s handy guide to [[closing out]] an {{isdama}}. We have assumed you are closing out as a result of a {{{{{1}}}|Failure to Pay or Deliver}} under Section {{{{{1}}}|5(a)(i)}}, because — unless you have inadvertently crossed some [[Tannhäuser Gate|portal, wormhole]] into a parallel and stupider universe — you almost certainly will be. that or Bankruptcy. Don’t try telling your [[credit officer]]s this by the way: he won’t believe you.
Here is the [[JC]]’s handy guide to [[closing out]] an {{isdama}}. We have assumed you are closing out as a result of a {{{{{1}}}|Failure to Pay or Deliver}} under Section {{{{{1}}}|5(a)(i)}}, because — unless you have inadvertently crossed some [[Tannhäuser Gate|portal, wormhole]] into a parallel and stupider universe — you almost certainly will be. that or Bankruptcy. Don’t try telling your [[credit officer]]s this by the way: he won’t believe you.
In what follows "Close-out Amount" means "Close-out Amount (if under a {{2002ma}}), {{isda92prov|Loss}} or {{isda92prov|Market Quotation}} amount (if under a {{1992ma}})


So, you will need:
So, you will need:
Line 13: Line 15:
:(iv) For this we go to Section {{{{{1}}}|6(e)}}, noting as we fly over it, that Section {{{{{1}}}|6(c)}} reminds us [[for the avoidance of doubt]] that even if the {{{{{1}}}|Event of Default}} which triggers the {{{{{1}}}|Early Termination Date}} evaporates in the meantime — these things happen, okay? — yon {{{{{1}}}|Defaulting Party}}’s goose is still irretrievably cooked.
:(iv) For this we go to Section {{{{{1}}}|6(e)}}, noting as we fly over it, that Section {{{{{1}}}|6(c)}} reminds us [[for the avoidance of doubt]] that even if the {{{{{1}}}|Event of Default}} which triggers the {{{{{1}}}|Early Termination Date}} evaporates in the meantime — these things happen, okay? — yon {{{{{1}}}|Defaulting Party}}’s goose is still irretrievably cooked.
*'''Determining {{isdaprov|Close-out Amount}}s'''<ref>Or their equivalents under the {{1992ma}}, of course.</ref>: There is a bit of a chicken-and-egg situation here as you must now ascertain termination values for the {{{{{1}}}|Terminated Transaction}}s as of the {{isdaprov|Early Termination Date}}, and you can’t really work out their [[mark-to-market]] values for that date at any time before then, unless you are able to see into the future and everything. Anyway, that’s a conundrum for your [[Trader|trading]] people (and in-house [[Metaphysics|metaphysicians]]) to deal with and it need not trouble we [[Legal Eagles|eagles of the law]]. For our purposes, the trading and risk people need to come up with {{isdaprov|Close-out Amount}}s<ref>See previous footnote.</ref> for all outstanding {{{{{1}}}|Transaction}}s. Once they have done that you are ready for your Section {{{{{1}}}|6(e)}} notice.
*'''Determining {{isdaprov|Close-out Amount}}s'''<ref>Or their equivalents under the {{1992ma}}, of course.</ref>: There is a bit of a chicken-and-egg situation here as you must now ascertain termination values for the {{{{{1}}}|Terminated Transaction}}s as of the {{isdaprov|Early Termination Date}}, and you can’t really work out their [[mark-to-market]] values for that date at any time before then, unless you are able to see into the future and everything. Anyway, that’s a conundrum for your [[Trader|trading]] people (and in-house [[Metaphysics|metaphysicians]]) to deal with and it need not trouble we [[Legal Eagles|eagles of the law]]. For our purposes, the trading and risk people need to come up with {{isdaprov|Close-out Amount}}s<ref>See previous footnote.</ref> for all outstanding {{{{{1}}}|Transaction}}s. Once they have done that you are ready for your Section {{{{{1}}}|6(e)}} notice.
*'''Section {{{{{1}}}|6(e)}} notice''': The Section {{{{{1}}}|6(e)}} notice terminating all outstanding {{{{{1}}}|Transaction}}s may only be served after close of business at the expiry of the [[grace period]], so therefore the first day on which a termination notice following a failure to pay {{{{{1}}}|Event of Default}} can be effective under an {{isdama}} is T+3 ({{2002isda}}) or T+5 {{1992isda}}.
*'''Early Termination Amount''': Your inhouse metaphysicians having calculated your {{isdaprov|Close-out Amount}}s, you must assemble all the values into a  The Section {{{{{1}}}|6(e)}} notice terminating all outstanding {{{{{1}}}|Transaction}}s may only be served after close of business at the expiry of the [[grace period]], so therefore the first day on which a termination notice following a failure to pay {{{{{1}}}|Event of Default}} can be effective under an {{isdama}} is T+3 ({{2002isda}}) or T+5 {{1992isda}}.
Retrieved from "https://jollycontrarian.com/index.php?title=Template:Failure_to_pay_procedure"