Local Business Day - ISDA Provision
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2002 ISDA Master Agreement
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Crosscheck: Local Business Day in a Nutshell™
Original text
See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA.
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Comparisons
The keen will have noticed that “Local Business Day” under an title transfer CSA is defined quite separately from “Local Business Day” as it is defined under the ISDA Master Agreement itself, whereas a “Local Business Day” under a security interest CSA is separately defined, only by reference to the Local Business Day in the ISDA Master Agreement, but clarifying that references to “payment” in the ISDA Master Agreement definition are deemed to include “Transfers” under the CSA.
Why ISDA’s British crack drafting squad™ couldn’t have done this for the title transfer CSAs too, we can only wonder.
Basics
There is no plain “Business Day” in the ISDA
Even old stagers are occasionally surprised to rediscover that ISDA’s crack drafting squad™ didn’t define the expression “Business Day” in the ISDA Master Agreement: only “Local Business Day” and “General Business Day” (and even the latter of these is only used in the definition of Local Business Day). It is, of course, defined in the 2006 ISDA Definitions and their spiritual successors the 2021 ISDA Interest Rate Derivatives Definitions — but these operate only at Confirmation/Transaction level. (in fairness, the first ISDA definitions were published before the 1992 ISDA, so there was never much of a gap)
But there must have been an uneasy period where there was no Business Day
“General Business Day” and “Local Business Day”
The defined term General Business Day appears in only one place in the ISDA Master Agreement: the definition of Local Business Day. It is this:
“General Business Day” means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits).
Thereby, a short definition is used to prop up a longer one.
The 1992 ISDA doesn’t have the concept of a “General Business Day” at all.
Local Business Day and 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.
CSA relevance
Local Business Day is also defined in the 1995 CSA (and its successors, dependents, friends and relations), as it the related term Regular Settlement Day. Which makes for fun, as premium subscribers will see below.
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