2018 CSD Nutshell Wikitext

Template:Nutshell 2018 CSD Preamble Paragraph 1. Interpretation
1(a) Definitions and Inconsistency. Terms defined in the Agreement have the same meanings in this Deed. There are other definitions in Paragraph 12. If this Deed conflicts with the Agreement or an Other CSA, this Deed will prevail to the extend contemplated by this Deed (and where it purports to amend them, the Agreement or any Other CSA). Definitions in Paragraph 13 override any contrary provisions elsewhere in this Deed.
1(b) Secured Party and Chargor. “Secured Party” means either party when acting in that capacity and corresponding references to the “Chargor” means the other party when acting in that capacity. Posted Credit Support (IM) that is described as “held” by a Secured Party means it has been credited to the Segregated Accounts with a Security Interest in that party’s favour under this Deed. References to transfers of assets to or from the Custodian (IM) means transfer to or from the relevant Segregated Accounts.
1(c) Scope of this Deed. When determining a Chargor’s Margin Amount (IM) under this Deed only the Covered Transactions (IM) specified in Paragraph 13 will be counted. Except where it expressly amends them, this Deed will not affect the parties’ rights and obligations under the Agreement or any Other CSA.
1(d) Amendment Effective Date (IM). Any express amendments this Deed makes to the Agreement or any Other CSA, will be effective as of the Amendment Effective Date (IM).
2 Security
Template:Nutshell 2018 CSD 2(a) 2(b) Security. Each party as the Chargor, as security for it Obligations with full title guarantee:

(i) grants a first fixed charge to the Secured Party over:

(A) all Posted Credit Support (IM); and

(B) each Segregated Account, and

(ii) assigns absolutely the Assigned Rights to the Secured Party.

Template:Nutshell 2018 CSD 2(c) Template:Nutshell 2018 CSD 2(d) Template:Nutshell 2018 CSD 2(e) Template:Nutshell 2018 CSD 2(f) Template:Nutshell 2018 CSD 2(g) Template:Nutshell 2018 CSD 2(h) 3. Credit Support Obligations
3(a) Delivery Amount (IM). Subject to Paragraphs 4 and 5, upon a Secured Party’s valid demand, if the Chargor’s Delivery Amount (IM) meets its Minimum Transfer Amount (IM), it must transfer to the Custodian (IM) Eligible Credit Support (IM) then equal in value to the Delivery Amount (IM). The “Delivery Amount (IM)” will be the amount by which the Chargor’s Credit Support Amount (IM) exceeds the prevailing Value of all Posted Credit Support (IM) held by the Secured Party (adjusted to include for any due but un-settled Delivery Amount (IM) or Return Amount (IM) as of the Calculation Date (IM)).
3(b) Return Amount (IM). Subject to Paragraphs 4 and 5, upon the Chargor’s demand following a Calculation Date (IM), if a Secured Party’s Return Amount (IM) is at least equal to its Minimum Transfer Amount (IM), it must instruct the Custodian (IM) to transfer Posted Credit Support (IM) to the Chargor per the Chargor’ demand having a Value equal to the (rounded) Return Amount (IM). The “Return Amount (IM)” for any Calculation Date (IM) will equal the amount by which:

(i) the prevailing Value of all Posted Credit Support (IM) the Secured Party holds (treating pending but unsettled Delivery Amount (IM)s and Return Amount (IM)s as not having been made)

exceeds

(ii) the Chargor’s Credit Support Amount (IM).

3(c) Margin Amount (IM); Margin Amount (IA); Margin Approach
3(c)(i) A Chargor’s “Margin Amount (IM)” on a Calculation Date (IM) is the Base Currency Equivalent of the total initial margin required for the Covered Transactions (IM) in question, under the Method used by the Regime specified in Paragraph 13.
3(c)(ii) A Chargor’s “Margin Amount (IA)” is the Base Currency Equivalent of all its Independent Amounts or equivalents (beyond any Margin Amount (IM) or Exposure) in any Other CSA in any other document, over any relevant thresholds the parties may have agreed but otherwise without deduction, all as determined under this Deed.
3(c)(iii) Margin Approach. Based on the “Margin Approach” specified in Paragraph 13 to govern the relationship between “Margin Amount (IM)” and “Margin Amount (IA)”, a Chargor’s “Credit Support Amount (IM)” on any Calculation Date (IM) will be:

(A) If “Distinct Margin Flow (IM) Approach” applies: Max [Margin Amount (IM) - Threshold (IM), 0], and the Chargor’s Margin Amount (IA) posting obligation under any Other CSA will not be affected in any way.

(B) If “Allocated Margin Flow (IM/IA) Approach” applies: Max [Margin Amount (IM) - Threshold (IM), 0] and its posting obligation for Margin Amount (IA) under any Other CSA will be reduced by that Credit Support Amount (IM) (subject to a minimum of zero).

(C) If “Greater of Margin Flow (IM/IA) Approach” applies: Max [Max [Margin Amount (IM) -Threshold (IM), Margin Amount (IA)], 0], and its posting obligation for Margin Amount (IA) under any Other CSA will be reduced to zero.

Paragraph 4. Conditions Precedent, Transfers, Timing, Calculations and Substitutions
4(a) Conditions Precedent. The Chargor’s obligations to transfer under Paragraphs 3 and 5 and the Secured Party’s obligations to instruct transfers under Paragraphs 3, 4(e)(iii), 5 and the provisions requiring the return of zero-Valued Posted Credit Support (IM) are subject to the conditions precedent that:

(i) There is no live Event of Default, Potential Event of Default or Specified Condition for the other party; and

(ii) No Early Termination Date has been designated for all Covered Transactions (IM) which has not been fully satisfied.

4(b) Means of Transfer. All transfers under this Deed must be accompanied with any necessary documentation to effect the transfer and made in accordance with the instructions of the relevant transferee:

(i) For Eligible Credit Support (IM): to the Custodian (IM), who must then credit them to the relevant Segregated Account; and

(ii) For Posted Credit Support (IM): by the Custodian (IM) (or if relevant the Secured Party) to the Chargor’s designated account for the receipt of such transfer.

4(c) Transfer Timing. Subject to Paragraph 4(a) and 5:

(i) Secured Party: if a Secured Party demands Eligible Credit Support (IM):

by the Notification Time, then the Chargor must transfer it by the close of business on the Regular Settlement Day;

after the Notification Time, then the Chargor must transfer it by the close of business on the Local Business Day after the Regular Settlement Day;

(ii) Chargor: if a Chargor demands Posted Credit Support (IM):

by the Notification Time, then the Secured Party must instruct the Custodian (IM) by the instructions deadline in the Control Agreement for it to transfer Posted Credit Support (IM) by close of business on the Regular Settlement Day;

after the Notification Time, then the Secured Party must instruct the Custodian (IM) by the instructions deadline in the Control Agreement for it to transfer Posted Credit Support (IM) by close of business on the Local Business Day after the Regular Settlement Day.

Template:Nutshell 2018 CSD 4(d) 4(e) Substitutions.

(i) On any Local Business Day the Chargor may send a “Substitution Notice” informing the Secured Party that it wishes to substitute new Eligible Credit Support (IM) (the “Substitute Credit Support (IM)”) into the Segregated Accounts in place of specified Posted Credit Support (IM) (the “Original Credit Support (IM)”).

(ii) The Chargor must obtain the Secured Party’s consent to the proposed substitution. The Chargor must transfer the Substitute Credit Support (IM) to the Segregated Accounts on the Local Business Day following receipt the Secured Party’s consent (or the date of the Substitution Notice if the consent requirement is disapplied).

(iii) Upon transfer of the Substitute Credit Support (IM) into the Segregated Accounts (that date the “Substitution Date”), the Secured Party must instruct the Custodian (IM) to transfer Original Credit Support (IM) as if the Chargor had demanded it under Paragraph 3(b) after the Notification Time on the Substitution Date. The Value of the Original Credit Support (IM) when transferred must be as close as practicable to, but not more than, the Value of the Substitute Credit Support (IM) at that time as calculated by the Calculation Agent (IM).

(i) an Early Termination Date for all Transactions happens because of an Event of Default or Access Condition for the Chargor [and the Chargor has not paid its Obligations in full when due]; or

(ii) if “Failure to Pay Early Termination Amount” applies, the Chargor is suffering an ongoing Event of Default and its Section 6(e) payment obligation for an Early Termination Date for all Transactions [umm something seems to be missing here?]:

Failure to Pay Early Termination Amount [applies][does not apply].

[(iii)] if “Control Agreement Secured Party Rights Event” applies to a Chargor, a “Secured Party Rights Event” will only occur Secured Party is contractually entitled to exercise exclusive control of the Posted Credit Support (IM).