Interest Amount - NY CSA Provision

ISDA 1994 New York Law Credit Support Annex A Jolly Contrarian owner’s manual™ Go premium Overview — Summary — Premium — See also — Wikitext Crosscheck: →NY OG →Eng OG →NY VM →Eng VM →Eng IM Interest Amount in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. Original text “Interest Amount” means, with respect to an Interest Period, the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Posted Collateral in the form of Cash held by the Secured Party on that day, determined by the Secured Party for each such day as follows: (x) amount of thatCash on that day; multiplied by (y) the Interest Rate in effect for that day; divided by (z) 360. The varieties of ISDA CSA Subject 1994 NY 1995 Eng 2016 VM NY 2016 VM Eng 2018 IM Eng Preamble Pre Pre Pre Pre Pre Interpretation 1 1 1 1 1 Security Interest 2 - 2 - 2 Credit Support Obligations 3 2 3 2 3 Transfers, Calculations and Exchanges - 3 - 3 - Conditions Precedent, Transfer Timing, Calculations and Substitutions 4 - 4 - 4 Dispute Resolution 5 4 5 4 5 Holding and Using Posted Collateral 6 - 6 - 6 Transfer of Title, No Security Interest - 5 - 5 - Events of Default 7 6 7 6 7 Rights and Remedies 8 - 8 - 8 Representations 9 7 9 7 9 Expenses 10 8 10 8 10 Miscellaneous 11 9 11 9 11 Definitions 12 10 12 10 12 Elections and Variables 13 11 13 11 13 Resources and Navigation Index: Click ᐅ to expand: CSA

Comparisons

The sole observable changes between the 1995 CSA and the 2016 VM CSA are, as best as this poor boy can fathom, these:

1. The (rather tedious) expression “... on the principal amount of the portion of the Credit Support Balance” amount has been massaged to the slightly more elegant “...on the portion of the Credit Support Balance”, although you’d have to say this is mostly likely to be a drafting error rather than some kind of late-life Damascene conversion in ISDA’s crack drafting squad™’s part to the merits of plain English.
2. The last paragraph contemplates currencies other than sterling having an Act/365 day count fraction.
3. The Negative Interest guff.

Basics

One might query whether “Daily Interest Compounding” should apply.

Interest compounds anyway at the end of each specified interest period (because it is paid out or added to the Credit Support Balance (VM), depending on which election you made at 11(g)(ii). If that period is “daily” then there's nothing really to be gained by Daily Interest Compounding. If the Interest Period is longer than that, there may be — but in the present environment (which, as those of you who lived through the Weimar Republic may recall, CAN MOST DEFINITELY CHANGE) — the thought of daily compounding 1/365th of the bugger all interest you're getting paid anyway might seem like a fight it’s not worth dying in a ditch about.

Premium content Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇 JC’s “nutshell” summary of the clause Background reading and long-form essays Template:Csa Interest Amount premium

See also

• “Interest Amount” as it appears in: 94 NY CSA — 95 English CSA — 2016 NY VM CSA — 2016 English VM CSA — 2018 English IM CSA
• Interest Payment
• Interest Period
• Interest Adjustment
• Interest Transfer
• Daily Interest Compounding
• 11(g)(ii)