VM CSA Anatomy

2016 VM CSA Anatomy™ →Go uptown Resources Full wikitext | Nutshell wikitext Navigation 1 (Interpretation) | 2 (Credit Support Obligations) | 3 (Transfers, Calculations and Exchanges) | 4 (Dispute Resolution) | 5 (Title Transfer etc) | 6 (Default) | 7 (Representation) | 8 (Expenses) | 9 (Miscellaneous) | 10 (Definitions) | 11 (Elections and Variables) Index: Click ᐅ to expand: 2016 VM CSA 2018 CSD 1995 CSA Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

The 2016 CSA generated at great expense by ISDA to deal with all the regulatory obligations to post and collect variation margin that have popped up around the world, like so many stable doors boinking emptily against their jambs while the ponies of financial ruin career wildly through the meadows of propriety.

Part of the point of regulatory compliance was to remove the concept of title-transfer Independent Amount (“IA” being ISDA-speak for “initial margin”). After all, title transfer IA rather strikes at the heart of the regulatory aspiration, namely to collateralise mark-to-market exposures, so that neither party carried significant credit exposure to the other.

But then everyone decided they quite liked their initial margin, as long as it wasn't *too* much. So ISDA prepared a version of the 2016 CSA which included the Independent Amounts they had so laboriously stripped out, only in a little paragraph buried in the schedule of elections (Para 11 or 13, depending on your edition).

Then ISDA decided not to publish it.

All this during the crescendo to the full-bore bunfight of repapering all the world's derivatives clients as a “seemingly immutable” pan-global regulatory deadline stood menacingly in the way like an unforgiving concrete wall to the sideways-sliding Morris Minor of the world’s derivatives documentation capacity.

The varieties of ISDA CSA

Subject	1994 NY	1995 Eng	2016 VM NY	2016 VM Eng	2018 IM Eng
Interpretation	Para 1 1(a) Definitions and Inconsistency 1(b) Secured Party and Pledgor	Para 1	Para 1 1(a) Definitions and Inconsistency 1(b) Secured Party and Pledgor 1(c) Scope of this Annex and the Other CSA	Para 1 1(a) Definitions and Inconsistency 1(b) Scope of this Annex and the Other CSA	Para 1 1(a) Definitions and Inconsistency 1(b) Secured Party and Chargor 1(c) Scope of this Deed 1(d) Amendment Effective Date (IM)
Security Interest	Para 2	[No equivalent]	Para 2	[No equivalent]	Para 2 2(a) Covenant to Perform 2(b) Security (2(b)) 2(c) Restriction on Dealings 2(d) Release of Security 2(e) Preservation of Security 2(f) Waiver of Defences 2(g) Immediate Recourse 2(h) Reinstatement
Credit Support Obligations	Para 3 3(a) Delivery Amount 3(b) Return Amount	Para 2 2(a) Delivery Amount 2(b) Return Amount	Para 3 3(a) Delivery Amount 3(b) Return Amount	Para 2 2(a) Delivery Amount 2(b) Return Amount	3 3(a) Delivery Amount (IM) 3(b) Return Amount (IM) 3(c) Margin Amount (IM); Margin Amount (IA); Margin Approach
Transfers, Calculations and Exchanges	[No equivalent]	Para 3 3(a) Transfers 3(b) Calculations 3(c) Exchanges	[No equivalent]	Para 3 3(a) Transfers 3(b) Calculations 3(c) Exchanges	[No equivalent]
Conditions Precedent, Transfer Timing, Calculations and Substitutions	Para 4 4(a) Conditions Precedent 4(b) Transfer Timing 4(c) Calculations 4(d) Substitutions	[No equivalent]	Para 4 4(a) Conditions Precedent 4(b) Transfer Timing 4(c) Calculations 4(d) Substitutions	[No equivalent]	Para 4 4(a) Conditions Precedent 4(b) Means of Transfer 4(c) Transfer Timing 4(d) Calculations 4(e) Substitutions
Dispute Resolution	Para 5	Para 4 4(a) Disputed Calculations or Valuations 4(b) No Event of Default	Para 5	Para 4 4(a) Disputed Calculations or Valuations 4(b) No Event of Default	Para 5 5(a) Disputed Calculations or Valuations 5(b) No Event of Default
Holding and Using Posted Collateral/ Custody Arrangements and the Control Agreement	Para 6 6(a) Care of Posted Collateral 6(b) Eligibility to Hold Posted Collateral; Custodians 6(c) Use of Posted Collateral 6(d) Distributions and Interest Amount	[No equivalent]	Para 6 6(a) Care of Posted Collateral (VM) 6(b) Eligibility to Hold Posted Collateral (VM); Custodians (VM) 6(c) Use of Posted Collateral (VM) 6(d) Distributions, Interest Amount (VM) and Interest Payment (VM)	[No equivalent]	6. 6(a) General 6(b) Custodian (IM) Risk 6(c) No Use of Posted Credit Support (IM) 6(d) No Offset 6(e) Distributions and Interest Amount
Transfer of Title, No Security Interest	[No equivalent]	Para 5 5(a) Transfer of Title 5(b) No Security Interest 5(c) Distributions and Interest Amount	[No equivalent]	Para 5 5(a) Transfer of Title 5(b) No Security Interest 5(c) Distributions and Interest Amount	[No equivalent]
Default	Para 7	Para 6	Para 7	Para 6	Para 7
Certain Rights and Remedies	Para 8 8(a) Secured Party’s Rights and Remedies 8(b) Pledgor’s Rights and Remedies 8(c) Deficiencies and Excess Proceeds 8(d) Final Returns	[No rights and remedies]	Para 8 8(a) Secured Party’s Rights and Remedies 8(b) Pledgor’s Rights and Remedies 8(c) Deficiencies and Excess Proceeds 8(d) Final Returns	[No rights and remedies]	Para 8 8(a) Secured Party’s Rights and Remedies 8(b) Chargor’s Rights and Remedies 8(c) Deficiencies and Excess Proceeds 8(d) Final Returns
Representations	Para 9	Para 7	Para 9	Para 7	Para 9
Expenses	Para 10 10(a) General 10(b) Posted Credit Support 10(c) Liquidation/Application of Posted Credit Support	Para 8	Para 10 10(a) General 10(b) Posted Credit Support (VM) 10(c) Liquidation/Application of Posted Credit Support (VM)	Para 8	Para 10 10(a) General 10(b) Posted Credit Support (IM) 10(c) Liquidation/Application of Posted Credit Support (IM)
Miscellaneous/Other Provisions	Para 11 11(a) Default Interest 11(b) Further Assurances 11(c) Further Protection 11(d) Good Faith and Commercially Reasonable Manner 11(e) Demands and Notices 11(f) Specifications of Certain Matters	Para 9 9(a) Default Interest 9(b) Good Faith and Commercially Reasonable Manner 9(c) Demands and Notices 9(d) Specifications of Certain Matters	Para 11 11(a) Default Interest 11(b) Further Assurances 11(c) Further Protection 11(d) Good Faith and Commercially Reasonable Manner 11(e) Demands and Notices 11(f) Specifications of Certain Matters 11(g) Legally Ineligible Credit Support (VM) 11(h) Return of Equivalent Credit Support (VM) 11(i) Reinstatement of Credit Support Eligibility 11(j) Credit Support Offsets	Para 9 9(a) Default Interest 9(b) Good Faith and Commercially Reasonable Manner 9(c) Demands and Notices 9(d) Specifications of Certain Matters 9(e) Legally Ineligible Credit Support (VM) 9(f) Return of Equivalent Credit Support (VM) 9(g) Reinstatement of Credit Support Eligibility 9(h) Credit Support Offsets	Para 11 11(a) Default Interest 11(b) Further Assurances 11(c) Further Protection 11(d) Good Faith and Commercially Reasonable Manner 11(e) Demands and Notices 11(f) Specifications of Certain Matters 11(g) Governing Law and Jurisdiction 11(h) Service of Process 11(i) Third Party Rights 11(j) Interpretation
Definitions	Para 12 Cash Credit Support Amount Custodian Delivery Amount Disputing Party Distributions Eligible Collateral Eligible Credit Support Exposure Independent Amount Interest Amount Interest Period Interest Rate Local Business Day Minimum Transfer Amount Notification Time Obligations Other Eligible Support Other Posted Support Pledgor Posted Collateral Posted Credit Support Recalculation Date Resolution Time Return Amount Resolution Time Secured Party Specified Condition Substitute Credit Support Substitution Date Threshold Transfer Valuation Agent Valuation Date Valuation Percentage Valuation Time Value	Para 10 Base Currency Base Currency Equivalent Credit Support Amount Credit Support Balance Delivery Amount Disputing Party Distributions Distributions Date Eligible Credit Support Eligible Currency Equivalent Credit Support Equivalent Distributions Exchange Date Exposure Independent Amount Interest Amount Interest Period Interest Rate Local Business Day Minimum Transfer Amount New Credit Support Notification Time Recalculation Date Resolution Time Return Amount Settlement Day Threshold Transferee Transferor Valuation Agent Valuation Date Valuation Percentage Valuation Time Value	Para 12 Base Currency Base Currency Equivalent Cash Covered Transaction Credit Support Eligibility Condition (VM) Custodian (VM) Delivery Amount (VM) Delivery Amount Reduction (VM) Disputing Party Distributions Eligible Collateral (VM) Eligible Credit Support (VM) Eligible Currency Eligible Return Amount (VM) Exposure Fungible Credit Support Type FX Haircut Percentage Interest Adjustment Reduction Amount (VM) Interest Amount (VM) Interest Payee (VM) Interest Payer (VM) Interest Payment (VM) Interest Period Interest Rate (VM) Legal Eligibility Requirements Local Business Day Minimum Transfer Amount Notification Time Obligations Other CSA Other CSA Excluded Credit Support Other Eligible Support (VM) Other Posted Support (VM) Pledgor Posted Collateral (VM) Posted Credit Support (VM) Recalculation Date Regular Settlement Day Resolution Time Return Amount (VM) Return Amount Reduction (VM) Secured Party Set-off Specified Condition Substitute Credit Support (VM) Substitution Date Total Ineligibility Date Transfer Transfer Ineligibility Date Valuation Agent Valuation Date Valuation Date Location Valuation Percentage Valuation Time Value	Para 10 Base Currency Base Currency Equivalent Credit Support Balance (VM) Credit Support Eligibility Condition (VM) Delivery Amount (VM) Delivery Amount Reduction (VM) Disputing Party Distributions Distributions Date Eligible Credit Support (VM) Eligible Currency Eligible Return Amount (VM) Equivalent Credit Support Equivalent Distributions Exchange Date Exposure Fungible Credit Support Type FX Haircut Percentage Interest Adjustment Reduction Amount (VM) Interest Amount (VM) Interest Payee (VM) Interest Payer (VM) Interest Payment (VM) Interest Period Interest Rate (VM) Legal Eligibility Requirements Legal Ineligibility Notice Local Business Day Minimum Transfer Amount New Credit Support (VM) Notification Time Original Credit Support (VM) Other CSA Other CSA Excluded Credit Support Recalculation Date Regular Settlement Day Resolution Time Return Amount (VM) return Amount Reduction (VM) Settlement Day Total Ineligibility Date Transferee Transferor Transfer Ineligibility Date Valuation Agent Valuation Date Valuation Date Location Valuation Percentage Valuation Time Value	Para 12 Act Allocated Margin Flow (IM/IA) Approach Amendment Effective Date (IM) Appropriation Value Assigned Rights Base Currency Base Currency Equivalent Other Currency Calcuation Agent (IM) Calculation Date (IM) Calculation Date Location (IM) Calculation Time (IM) Cash Chargor Chargor Access Notice Chargor Rights Event Control Agreement Covered Transactions (IM) Credit Support Amount (IM) Custodian Event Custodian (IM) Delivery Amount (IM) Disputing Party Distinct Margin Flow (IM) Approach Distributions Eligible Credit Support (IM) Eligible Currency Exercising Party FX Haircut percentage Greater of Margin Flow (IM/IA) Approach Local Business Day Margin Amount (IA) Margin Amount (IM) Margin Approach Method Minimum Transfer Amount (IM) Notification Time Obligations Original Credit Support (IM) Other CSA Posted Credit Support (IM) Proceedings Recalculation Date Receiver Regime Regular Settlement Day Regulations Resolution Time Return Amount (IM) Secured Party Secured Party Rights Event Security Assets Security Interest Segregated Account Specified Condition Substitute Credit Support (IM) Substitution Date Substitution Notice Threshold (IM) Valuation Percentage Value
Elections and Variables	Para 13 13(a) Security Interest for “Obligations” 13(b) Credit Support Obligations 13(c) Valuation and Timing 13(d) Conditions Precedent and Secured Party’s Rights and Remedies 13(e) Substitution 13(f) Dispute Resolution 13(g) Holding and Using Posted Collateral 13(h) Distributions and Interest Amount 13(i) Additional Representation(s) 13(j) Other Eligible Support and Other Posted Support 13(k) Demands and Notices 13(l) Addresses for Transfers 13(m) Other Provisions	Para 11 Paragraph 11(a): Base Currency and Eligible Currency Paragraph 11(b): Credit Support Obligations Paragraph 11(b)(i): Delivery Amount, Return Amount and Credit Support Amount Paragraph 11(b)(i)(A): Delivery Amount Paragraph 11(b)(i)(B): Return Amount Paragraph 11(b)(i)(C): Credit Support Amount Paragraph 11(b)(ii): Eligible Credit Support Paragraph 11(b)(iii): Thresholds Paragraph 11(b)(iii)(A): Independent Amount Paragraph 11(b)(iii)(B): Threshold Paragraph 11(b)(iii)(C): Minimum Transfer Amount Paragraph 11(b)(iii)(D): Rounding Paragraph 11(c): Valuation and Timing Paragraph 11(c)(i): Valuation Agent Paragraph 11(c)(ii): Valuation Date Paragraph 11(c)(iii): Valuation Time Paragraph 11(c)(iv): Notification Time Paragraph 11(d): Exchange Date Paragraph 11(e): Dispute Resolution Paragraph 11(e)(i): Resolution Time Paragraph 11(e)(ii): Value (dispute resolution) Paragraph 11(e)(iii): Alternative Paragraph 11(f): Distributions and Interest Amount Paragraph 11(f)(i): Interest Rate Paragraph 11(f)(ii): Transfer of Interest Amount Paragraph 11(f)(iii): Alternative to Interest Amount Paragraph 11(g): Addresses for Transfers	Para 13 13(a) Base Currency and Eligible Currency 13(a)(i) Base Currency 13(a)(ii) Eligible Currency 13(b) Covered Transactions; Security Interest for Obligations; Exposure 13(b)(i) Covered Transactions 13(b)(i)(A) Covered Transactions 13(b)(ii) Obligations 13(b)(iii) Exposure 13(c) Credit Support Obligations 13(c)(i) Delivery Amount (VM) and Return Amount (VM) 13(c)(i)(A) Delivery Amount (VM) 13(c)(i)(B) Return Amount (VM) 13(c)(ii) Eligible Collateral (VM) 13(c)(iii) Legally Ineligible Credit Support (VM) 13(c)(iii)(A) Total Ineligibility Date 13(c)(iii)(B) Transfer 13(c)(iv) Credit Support Eligibility Conditions (VM) 13(c)(v) Valuation Percentage; FX Haircut Percentage 13(c)(v)(A) Valuation Percentage 13(c)(v)(B) FX Haircut Percentage 13(c)(vi) Other Eligible Support (VM) 13(c)(vii) Minimum Transfer Amount 13(c)(vii)(A) Minimum Transfer Amount 13(c)(vii)(B) Rounding 13(c)(viii) Transfer Timing 13(d) Valuation and Timing 13(d)(i) Valuation Agent 13(d)(ii) Valuation Date 13(d)(iii) Valuation Time 13(d)(iv) Notification Time 13(e) Conditions Precedent and Secured Party’s Rights and Remedies 13(f) Substitution 13(f)(i) Substitution Date 13(f)(ii) Consent 13(g) Dispute Resolution 13(g)(i) Resolution Time 13(g)(ii) Value 13(g)(iii) Alternative 13(h) Holding and Using Posted Collateral (VM) 13(h)(i) Eligibility to Hold Posted Collateral (VM); Custodians (VM) 13(h)(ii) Use of Posted Collateral (VM) 13(i) Distributions and Interest Payment (VM) 13(i)(i) Interest Rate (VM) 13(i)(ii) Transfer of Interest Payment (VM) or application of Interest Amount (VM) Interest Transfer Interest Payment Netting Interest Adjustment 13(i)(iii) Other Interest Elections Negative Interest Daily Interest Compounding 13(i)(iv) Alternative to Interest Amount (VM) and Interest Payment (VM) 13(j) Credit Support Offsets 13(k) Additional Representations 13(l) Other Eligible Support (VM) and Other Posted Support (VM) 13(l)(i) Value 13(l)(ii) Transfer 13(m) Demands and Notices 13(n) Addresses for Transfers 13(o) Other CSA 13(p) Other Provisions	Para 11 Paragraph 11(a): Base Currency and Eligible Currency Paragraph 11(b): Covered Transactions; Exposure 11(c) Credit Support Obligations. 11(c)(i) Delivery Amount (VM) and Return Amount (VM) 11(c)(ii) Eligible Credit Support (VM) 11(c)(iii) Legally Ineligible Credit Support (VM) 11(c)(iv) Credit Support Eligibility Conditions (VM) 11(c)(v) Valuation Percentage; FX Haircut Percentage 11(c)(vi) Thresholds. 11(c)(vii) Transfers. 11(d) Valuation and Timing 11(d)(i) “Valuation Agent” 11(d)(ii) “Valuation Date” 11(d)(iii) “Valuation Time” 11(d)(iv) “Notification Time” 11(e) Exchange Date. 11(f) Dispute Resolution 11(f)(i) “Resolution Time” 11(f)(ii) Value 11(f)(iii) Alternative. 11(g) Distributions and Interest Amount (VM) 11(g)(i) Interest Rate (VM) 11(g)(ii) Transfer of Interest Payment (VM) or application of Interest Amount (VM) 11(g)(iii) Other Interest Elections 11(g)(iv) Alternative to Interest Amount (VM) 11(h) Credit Support Offsets. 11(i) Addresses for Transfers. 11(j) Other CSA.