Template:M summ 2002 ISDA Local Business Day

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General Business Day and ~

The defined term General Business Day appears in only one place in the ISDA Master Agreement: the definition of Local Business Day. It is this:

“General Business Day” means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits).

Thereby, a short definition used to prop up a longer one. You might think “business day” is kind of a clear-enough, well understood-enough term that it shouldn’t need to be defined at all, but that is not how ISDA’s crack drafting squad™ operates.

Local Business Day is also defined in the 1995 CSA (and its successors, dependents, friends and relations), as it the related term Regular Settlement Day. Which makes for fun, as we shall see:

How the business days work for demands under a Credit Support Annex

  1. Valuation and demand: A Template:Isda92 may demand a Template:Isda92 (Para Template:Isda92) or a Template:Isda92 Para Template:Isda92) “on or promptly following a Template:Isda92”.
  2. Valuation Date: A “Template:Isda92” means a day on which banks are open in at least one Template:Isda92 for each party.
    1. Each party can specify however many Template:Isda92s it likes.
    2. Tip: the fewer you specifiy, the greater the chance none will be open on a given day, and you will be excused from a margin call, so don’t overdo it. One should be ample.
  3. Settlement: Any Template:Isda92 or Template:Isda92 must be settled (Para Template:Isda92) by the close of business on the Template:Isda92 relating to the date such demand is received (if received before the Template:Isda92 (spoiler: usually 11 am, noon or 1pm)), or the Template:Isda92 relating to the day after the date such demand is received (if received after the Template:Isda92).
  4. Regular Settlement Day: A “Template:Isda92” means the same Template:Isda92 — careful: as defined in the 1995 CSA, not the ISDA Master Agreement — on which the demand is made.
  5. Local Business Day: A “Template:Isda92” (under the 1995 CSA) means, in the case of notices, a day on which banks are open in the address for the notice most recently specified by the Recipient. What if demand is made on a day that is not a Template:Isda92? Simple: by dint of Section 12 of the ISDA Master Agreement, the notice will be deemed given on the next Local Business Day (as defined in the ISDA Master Agreement, not the 1995 CSA).

Easy.

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