Template:M summ 2002 ISDA Local Delivery Day

What is the difference between a “Local Business Day” and a “Local Delivery Day”?

Local Business Day is a lot more fiddly, and context dependent, for one thing. As per our nutshell summary, what counts as a Local Business Day depends on who is asking: for performing general obligations it looks to the Transaction Confirmation; for Waiting Periods it depends where the triggering event occurs, for payments it depends where the account is located, for communications it depends on the location of the recipient.

A Local Delivery Day — which comes up only in when considering whether one has failed to deliver a non-cash security of some kind (Section 5(a)(i)) or, even though ostensibly having failed to dliver it, you haven’t yet technically failed to deliver it, on account of an intervening Illegality or Force Majeure which has triggered a Waiting Period before that failure to deliver becomes an official Failure to Pay or Deliver.

Now it is true that one could have snuck this in as a separate limb of Local Business Day — there are already four; why not five? — and saved oneself an extra definition, but unfussily economising on drafting is really not how ISDA’s crack drafting squad™ rolls.

And nor is it obvious that the florid prose in which the ’squad rendered “Local Delivery Day”, when it comes down to it, says anything enormously different to the first limb (a) of the definition of Local Business Day in any case. To our clouded eyes, both of them say: “a day on which relevant settlement systems are operating in the place nominated in the Confirmation” — and if not it comes down to agreement by the parties in one case, or customary market practice in the other.

Candidly, of those two “customary market practice” is the better, as it avoids an apparent agreement to agree, although generally the ISDA standard of commercial reasonableness in close-out scenarios probably gets you to the same place in any case.