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| {{fullanat2|isda|6(a)|1992|6(a)|2002}}Automatic Early Termination is a concept which exists in Section {{isdaprov|6(a)}} {{isdaprov|Right to Terminate Following Event of Default}} of the {{isdama}}. it is relevant to [[Netting]]. | | {{fullanat2|isda|6(a)|1992|6(a)|2002}}{{isdaprov|Automatic Early Termination}} is a concept which exists in Section {{isdaprov|6(a)}} {{isdaprov|Right to Terminate Following Event of Default}} of the {{isdama}}. As is so much in the {{isdama}}, it’s all about '''[[Netting]]'''. |
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| ===AET under the {{1987ma}}===
| | {{isdaprov|AET}} is only triggered by certain events under the {{isdaprov|Bankruptcy}} [[Events of Default - ISDA Provision|event of default]], and isn’t triggered by {{isdaprov|Cross Default}} for example. |
| Note the somewhat difficult position for AET under the {{1987ma}} - a fuller discussion at that article - which was part of the reason for the move to the {{1992ma}} in the first place.
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| ==Analysis==
| | It only applies to formal {{isdaprov|bankruptcy}} events in the jurisdiction, not “catastrophic credit events that are effectively as good bankruptcy” but which don’t amount to formal {{tag|bankruptcy}} events, for reasons that will become clear below. |
| Note that {{isdaprov|AET}} is only triggered by certain events under the {{isdaprov|Bankruptcy}} [[Events of Default - ISDA Provision|event of default]], and isn't triggered by {{isdaprov|Cross Default}} for example.
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| It only applies to formal {{isdaprov|bankruptcy}} events in the jurisdiction, not “catastrophic credit events that are effectively as good bankruptcy” but which don't amount to formal bankruptcy events, for reasons that will become clear below.
| | {{automaticearlytermination}} |
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| | ===[[AET]] under the {{1987ma}}=== |
| | Note the somewhat difficult position for AET under the {{1987ma}} - a fuller discussion at that article - which was part of the reason for the move to the {{1992ma}} in the first place. |
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| {{automaticearlytermination}}
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| {{seealso}} | | {{seealso}} |
| *{{isdaprov|Right to Terminate Following Event of Default}} | | *{{isdaprov|Right to Terminate Following Event of Default}} |
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ISDA Anatomy™
1992 ISDA
6(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days’ notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), (Bankruptcy) and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
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2002 ISDA
6(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days’ notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
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Index: Click ᐅ to expand:Navigation
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Automatic Early Termination is a concept which exists in Section 6(a) Right to Terminate Following Event of Default of the ISDA Master Agreement. As is so much in the ISDA Master Agreement, it’s all about Netting.
AET is only triggered by certain events under the Bankruptcy event of default, and isn’t triggered by Cross Default for example.
It only applies to formal bankruptcy events in the jurisdiction, not “catastrophic credit events that are effectively as good bankruptcy” but which don’t amount to formal bankruptcy events, for reasons that will become clear below.
Template:Automaticearlytermination
Note the somewhat difficult position for AET under the 1987 ISDA - a fuller discussion at that article - which was part of the reason for the move to the 1992 ISDA in the first place.
See also