Credit Support Annex

The Credit Support Annex is a document appended to the ISDA Master Agreement whcih deals with collateralisation of Swap Agreements. Delivery of credit support may be effected by pledge under New York Law, in which case the 1994 NY CSA is the appropriate annex document, or by title transfer under English Law, in whcih case the 1995 CSA is the appropriate annex document.

If you are using the 1995 CSA *(as is usual for English law governed ISDA Master Agreements), then you might find the CSA Anatomy a good place to start.

===Title transfer vs. Pledge=== This feels as good a time as any to raise the great subject of title transfer and pledge. In a Nutshell™:

• Title Transfer: The English law CSA – outside the US, by far the most common type – is a title transfer document:
  • when securities delivered to a party they become the recipient's property absolutely
  • recipient does not hold them in custody for the transferor;
  • recipient has only an obligation to redeliver an equivalent security.
  • Therefore no CASS question arises at any point.
• Pledge: The English Law CSD and New York Law CSA are “pledge” documents:
  • The transferor delivers the securities to the receipient to hold for the transferor – the transferor retains title
  • Recipient holds securities as transferor's custodian subject to a security interest securing their obligation under the swap.
  • The custody arrangement only exists while recipient holds the security, not before.

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