Template:M summ 2002 ISDA 6(e)

On the difference between an “Early Termination Amount” and a “Close-out Amount”

Regrettably, the 1992 ISDA features neither an {{{{{1}}}|Early Termination Amount}} nor a {{{{{1}}}|Close-out Amount}}. The 2002 ISDA has both, which looks like rather an indulgence until you realise that they do different things.

A {{{{{1}}}|Close-out Amount}} is the termination value for a single {{{{{1}}}|Transaction}}, or a related group of {{{{{1}}}|Transaction}}s that a {{{{{1}}}|Non-Defaulting Party}} or {{{{{1}}}|Non-Affected Party}} calculates while closing out an 2002 ISDA, but it is not the final, overall sum due under the ISDA Master Agreement itself. Each of the determined {{{{{1}}}|Transaction}} {{{{{1}}}|Close-out Amount}}s summed with the various {{{{{1}}}|Unpaid Amount}}s to arrive at the {{{{{1}}}|Early Termination Amount}}, which is the total net sum due under the ISDA Master Agreement after the close-out process. (See Section {{{{{1}}}|6(e)(i)}} for more on that). JC’s has updated the step-by-step guide to closing out an ISDA and it is now premium content. You can access it here.