Transfers - VM CSA Provision

2016 VM CSA Anatomy™ →Go uptown In a Nutshell™ Section 3(a): 3(a) Transfers. All transfers of Eligible Credit Support (VM), Equivalent Credit Support (VM), Interest Payment (VM) or Equivalent Distributions will be made following the relevant receipient’s instructions: 3(a)(i) for cash, by transfer into the recipient’s bank account; 3(a)(ii) for physically settled certificated securities, by delivery in appropriate physical form to the recipient with duly executed transfer instruments, stamps and documents needed to effect legally valid transfer of legal and beneficial title to the recipient; and 3(a)(iii) for book-entry securities, by causing the securities intermediary to change its books and records to reflect a legally effective transfer of legal and beneficial title to the recipient. Subject to Paragraph 4, if a deliveror receives a demand for Eligible Credit Support (VM) or Equivalent Credit Support (VM) by the Notification Time, then it must transfer by the close of business on the Regular Settlement Day for the date of the demand; if later than that, by close of business on the Regular Settlement Day for the following day. view template 2016 VM CSA full text of Section 3(a): 3(a) Transfers. All transfers under this Annex of any Eligible Credit Support (VM), Equivalent Credit Support (VM), Interest Payment (VM) or Equivalent Distributions will be made in accordance with the instructions of the Transferee or Transferor, as applicable, and will be made: 3(a)(i) in the case of cash, by transfer into one or more bank accounts specified by the recipient; 3(a)(ii) in the case of certificated securities which cannot or which the parties have agreed will not be delivered by book-entry, by delivery in appropriate physical form to the recipient or its account accompanied by any duly executed instruments of transfer, transfer tax stamps and any other documents necessary to constitute a legally valid transfer of the transferring party’s legal and beneficial title to the recipient; and 3(a)(iii) in the case of securities which the parties have agreed will be delivered by book-entry, by causing the relevant depository institution (s) or other securities intermediaries to make changes to their books and records sufficient to result in a legally effective transfer of the transferring party’s legal and beneficial title to the recipient or its agent. Subject to Paragraph 4, and unless otherwise specified in Paragraph 11, if a demand for the transfer of Eligible Credit Support (VM) or Equivalent Credit Support (VM) is received by the Notification Time, then the relevant transfer will be made not later than the close of business on the Regular Settlement Day relating to the date such demand is received; if a demand is received after the Notification Time, then the relevant transfer will be made not later than the close of business on the Regular Settlement Day relating to the day after the date such demand is received. view template Related Agreements Click here for the text of Section 3(a) in the 1995 English Law CSA Click here for the text of Section 3(a) in the 2016 English Law VM CSA Click [[{{{3}}} - NY VM CSA Provision|here]] for the text of the equivalent, Section [[{{{3}}} - NY VM CSA Provision|{{{3}}}]] in the 2016 NY Law VM CSA Comparisons 1995 CSA and 2016 VM CSA: click for comparison {{nycsadiff {{{3}}}}} 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.

1995 CSA and 2016 VM CSA: click for comparison You won’t believe this, but ISDA’s crack drafting squad™ mostly managed to resist the urge to abbreviate the tedious from drafting in the 1995 CSA. Relevant for transfers of Delivery Amounts and Return Amounts.

CSA transfer timings

This is how the timing works for CSA transfers.

Terminology check: to make this easy, we refer to both 2016 VM CSAs and 2016 VM CSAs as “2016 VM CSAs”. This cuts out a lot of “Delivery Amount and/or Return Amount as the case may be” nonsense. The date on which someone demands a 2016 VM CSA we call a “2016 VM CSA”.

To be clear, neither Demand Date nor 2016 VM CSA are “ISDA canon”.

Remember the 2016 VM CSA is simply the person making the demand.

1. Value 2016 VM CSA and 2016 VM CSA: Firstly, value what you are going to call: the 2016 VM CSA under para 2016 VM CSA or 2016 VM CSA. This is roughly 2016 VM CSA - 2016 VM CSA (or vice versa).
   1. Under 2016 VM CSA, the 2016 VM CSA will transfer 2016 VM CSA having a 2016 VM CSA as of the date of transfer of the 2016 VM CSA.
   2. Per the 2016 VM CSA provision, all calculations happen at the 2016 VM CSA. Fluctuations in value after that time won’t invalidate the 2016 VM CSA, but they may mean a party can immediately call for more 2016 VM CSA (that is, have another 2016 VM CSA).
   3. The 2016 VM CSA keys off the 2016 VM CSA.
2. 2016 VM CSA: On or promptly following any 2016 VM CSA (it need not be a 2016 VM CSA) on which the 2016 VM CSA has moved in its favour, one party may demand a 2016 VM CSA (para 2(a)) or a 2016 VM CSA (para 2(b)).
3. 2016 VM CSA: Under para 2016 VM CSA (2016 VM CSA) if the demand is received before the 2016 VM CSA on a 2016 VM CSA that is a 2016 VM CSA the transfer must be made by close of business on the related Regular Settlement Day. If received after the 2016 VM CSA or on a non-2016 VM CSA, the transfer must be made by close of business on the Regular Settlement Day relating to the day after the Demand Date.
4. Settlement Day: Here is where things differ materially between the 1995 CSA and the 2016 VM CSA.
   1. 1995 CSA: The Settlement Day for any day (whether or not it is a 2016 VM CSA) is:
      1. Cash: for cash, the next 2016 VM CSA and,
      2. Securities: for securities, the 2016 VM CSA after the date on which a trade in the relevant security, if effected on the day in question, would have been settled in accordance with customary practice.
   2. 2016 VM CSA: In the new world we have the new concept of the Regular Settlement Day, and this is the same Local Business Day as the Demand Date. The run-off text at the end of Paragraph 3(a) gives you a little more flex: if the demand came after the Notification Time, then you must make the transfer by close on the Regular Settlement Day for the next day. Just how the business days interact under the ISDA and CSA is about as complicated as string theory, by the way.