Template:M comp disc EUA Annex (d)(i)

Settlement

The same broad concept is dealt with as follows:

• ISDA: Settlement
• EFET: Delivery, Acceptance and Scheduling Obligations
• IETA: Primary Obligation

Situation normal... : Techy drafting slip from ISDA’s crack drafting squad™: “Number of Allowances to be Delivered” isn’t a thing: there is “Number of Allowances”, which is the notional size of the Transaction, and then there is Allowances to be Delivered which references the particular number of Allowances to be settled under an Option and thus already builds in a number.

Delivery

What counts as a delivery, when it is deemed completed, to which accounts and so on, and some curious over-description redolent of a bad used car salesman who really should have stopped talking, but found himself filling the uncomfortable silence with words which by their pregnancy compel him to complete his sentence, which in turn, he realises to his horror, compels him to confess mechanical flaws in the lemon he was really hoping you would drive off the lot with before discovering.

Settlement Disruption Event

In a Nutshell™ what is going on here is:

• When you thought you were going to settle, you can’t — where it isn’t your fault (that’s a Failure to Deliver) and it isn’t the European Union’s fault either (that’s a Suspension Event)
• The parties’ respective settlement obligations are suspended until resolution, and (unless things don’t resolve for an unfeasibly long time) then performed within two business days of the settlement Disruption Event lifting;
• If they don’t lift by the earliest of (i) 9 Delivery Business Days following scheduled settlement or (ii) the next Reconciliation Deadline by which the EUAs have to be surrendered or (iii) 3 Delivery Business Days before the next End of Phase Reconciliation Deadline, then it is deemed to be an Illegality.
• If there is an Early Termination Date then if “Payment on Termination for Settlement Disruption” applies, you determine the Early Termination Amount assuming the suspended obligations resume on the Early Termination Date, and if it doesn’t, that’s all she wrote.

But note: no extra Cost of Carry Amount factored in here, as there is for a Suspension Event. Why? Cherchez moi. If you find out, let me know.

Suspension Event

You will notice similarities between the way a Suspension Event and a Settlement Disruption Event. One can, and we do, bellyache about the way ISDA’s crack drafting squad™ goes about the task of rendering its fantastical ideas in the language of Shakespeare and Milton, but you can’t really fault them for consistency.

Here, in counterpoint to a normal Settlement Disruption Event if there is delayed performance the payment obligation is adjusted to include a Cost of Carry Amount.