Rate of exchange - ISDA Provision
Overview
Rate of exchange — for reasons known only to ISDA’s crack drafting squad™ not capitalised — features only in Section 6(f), sealing with set-off, and Section 8(b), dealing with Contractual Currency. Exchange rate: the rate at which you exchange things. Maybe they couldn’t bring themselves to capitalise it because it is so obvious.
Summary
You could scarcely ask for a less necessary definition. In their hearts, you sense ISDA’s crack drafting squad™ knew this, for they couldn’t find it in themselves to even capitalise it. In the 1992 ISDA, rate of exchange didn’t even make the Definitions section, but was half-heartedly tacked onto the end of a clause halfway through the Contractual Currency section. It made it into the 2002 ISDA’s Definitions Section only because it somehow wangled its unecessary way into the new Set-off clause (Section 6(f) of the 2002 ISDA).
But if two guiding principles of defining terms are (i) don’t, for terms you only use once or twice, and (ii) don’t, if the meaning of the thing you are considering defining is patently obvious — then “rate of exchange” comprehensively fails the main criteria of a good definition.
The JC’s general view is, all other things being equal, to ease comprehension, eschew definitions.
Also, could they not have used “exchange rate”, instead of rate of exchange?
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- The JC’s famous Nutshell™ summary of this clause