Default under specified transaction: Difference between revisions
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Amwelladmin (talk | contribs) Created page with "A default under specified transaction, or "DUST", is a concept native to the {{isdama}} but which you may see in other Master Trading Documentation (but not all: it is..." |
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===See also=== | ===See also=== | ||
*[[Cross default]] | *[[Cross default]] | ||
*{{isdaprov|Default Under Specified Transaction}} (ISDA) | |||
*[[Event of default]] | *[[Event of default]] | ||
{{isdaanatomy}} | {{isdaanatomy}} | ||
Revision as of 16:39, 19 January 2015
A default under specified transaction, or "DUST", is a concept native to the ISDA Master Agreement but which you may see in other Master Trading Documentation (but not all: it is not usual in a 2010 GMSLA or a Global Master Repurchase Agreement), which provides a right to terminate a master trading agreement upon a default by your counterparty under another equivalent master agreement between you and that counterparty.
It can be compared to cross default, which allows you to terminate your master agreement when the counterparty defaults under indebtedness to a third party (not you).
Differences between cross default and DUST
- Cross default generally references indebtedbess; DUST references bilateral derivative and trading transactions whcih are not in the nature of indebtedness
- Cross default is only triggered once a certain threshhold is hit; DUST is triggered upon any breach;
- Cross default references your counterparty owes to a third party; DUST references other obligations your counterparty owes you