Template:Isda 5(a)(vi) comp

The 2002 ISDA updates the 1992 ISDA’s Cross Default so that if the combined amount outstanding under the two limbs of {{{{{1}}}|Cross Default}} exceed the {{{{{1}}}|Threshold Amount}}, then it will be an {{{{{1}}}|Event of Default}}. Normally, under the 1992 ISDA, {{{{{1}}}|Cross Default}} requires one or the other limbs to be satisfied — you can’t add them together. This was a bit of a snafu.

The two limbs are:

1. a default under a financial agreement that would allow a creditor to accelerate any indebtedness that party owes it;
2. a failure to pay on the due date under such agreements after the expiry of a grace period.

Comparison with securities financing

Neither the 2010 GMSLA nor the Global Master Repurchase Agreement have, as standard, either a cross default or a default under specified transaction provision. Unless some bright spark thinks it is a good idea to negotiate one in.