Template:M summ 2002 ISDA 6(c): Difference between revisions

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Replaced content with "{{isda 6(c) summ|isdaprov}}"
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[[6(c) - ISDA Provision|Once]] you have designated your {{isdaprov|Early Termination Date}} under Section {{isdaprov|6(a)}}, proceed directly to Section {{isdaprov|6(e)}} to determine the {{isdaprov|Close-out Amount}} (if you are under a {{2002ma}}, or “tiresomely unlabelled amount payable upon early termination of the {{isdama}}” if you a labouring under a {{1992ma}}).
{{isda 6(c) summ|isdaprov}}
 
The key thing to observe here is that, suddenly, all {{isdaprov|Transactions}} vanish, and all payments and deliveries due under them are suspended, to be replaced by the single {{isdaprov|Close-out Amount}} per {{isdaprov|Transaction}}, which is then subsumed into the {{isdaprov|Early Termination Amount}} for the whole agreement. Note the {{isdaprov|Close-out Amount}} does not have an independent existence as a payable amount owed by any party at any point: it is simply a calculation one makes, by reference to a now extinguished {{isdaprov|Transaction}}, on the way to determining the whole-agreement Early Termination Amount. This is why a [[Transaction-specific guarantee]] is a flawed type of {{isdaprov|Credit Support Document}} — at the very point you call upon it, the {{isdaprov|Transaction}} will vanish.

Latest revision as of 17:10, 31 December 2023

Once you have designated your Early Termination Date under Section 6(a), proceed directly to Section 6(e) to determine the Close-out Amount (if you are under a 2002 ISDA, or “tiresomely unlabelled amount payable upon early termination of the ISDA Master Agreement” if you a labouring under a 1992 ISDA).

The key thing to observe here is that, suddenly, all Transactions vanish, and all payments and deliveries due under them are suspended, to be replaced by the single Close-out Amount per Transaction, which is then subsumed into the Early Termination Amount for the whole agreement. Note the Close-out Amount does not have an independent existence as a payable amount owed by any party at any point: it is simply a calculation one makes, by reference to a now extinguished Transaction, on the way to determining the whole-agreement Early Termination Amount. This is why a Transaction-specific guarantee is a flawed type of Credit Support Document — at the very point you call upon it, the Transaction will vanish.

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