Template:Mdes vs ades

Market Disruption Events vs Additional Disruption Events showdown

In a Nutshell™:

• Market Disruption Events handle difficulties in valuing ongoing Transactions in a disrupted market — where the parties are happy to carry on with the position, but their practical means of marking-to-market (and therefore margining) their exposures under the Transactions is hampered because of market dislocation;
• Additional Disruption Events handle your rights to terminate Transactions, usually because your ability to properly risk-manage your positions — i.e., hedge — is undermined by the market dislocation.

So the two are independent. You don't have to wait for a period of Exchange Disruption before invoking a Hedging Disruption; you can treat something as an Exchange Disruption even if it is not a Hedging Disruption.

In point of fact an Exchange Disruption may well count as a Hedging Disruption, so this might be why the Consequences of Disrupted Days wording seems to finally run out of enthusiasm for its own existence, as if ISDA’s crack drafting squad™ threw in the towel. Probably because, after eight straight Disrupted Days, the likelihood one or other party hasn’t canned the Transaction on the grounds of Hedging Disruption is pretty low.