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ISDA Anatomy™
2002 ISDA
“Local Business Day” means
- (a) in relation to any obligation under Section 2(a)(i), a General Business Day in the place or places specified in the relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement,
- (b) for the purpose of determining when a Waiting Period expires, a General Business Day in the place where the event or circumstance that constitutes or gives rise to the Illegality or Force Majeure Event, as the case may be, occurs,
- (c) in relation to any other payment, a General Business Day in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment and, if that currency does not have a single recognised principal financial centre, a day on which the settlement system necessary to accomplish such payment is open,
- (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General Business Day but for the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and
- (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction.
Line breaks added to improve comprehension
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1992 ISDA
“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits):
- (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement,
- (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment,
- (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and
- (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.
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Helpfully, Local Business Day is also defined in the 1995 CSA. Nevertheless, the 2002 ISDA’s Local Business Day definition is, to connoisseurs, the last word in excellent legal drafting.
The many gorgeous, multi-hued variations on the business day can be enjoyed as follows:
ISDA extended universe
How the business days work for demands under a Credit Support Annex
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Valuation and demand: A {{{{{1}}}|Transferee}} may demand a {{{{{1}}}|Delivery Amount}} (Para {{{{{1}}}|2(a)}}) or a {{{{{1}}}|Return Amount}} Para {{{{{1}}}|2(b)}}) “on or promptly following a {{{{{1}}}|Valuation Date}}”.
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Valuation Date: A “{{{{{1}}}|Valuation Date}}” means a day on which banks are open in at least one {{{{{1}}}|Valuation Date Location}} for each party.
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Each party can specify however many {{{{{1}}}|Valuation Date Location}}s it likes.
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Tip: the fewer you specifiy, the greater the chance none will be open on a given day, and you will be excused from a margin call, so don’t overdo it. One should be ample.
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Settlement: Any {{{{{1}}}|Delivery Amount}} or {{{{{1}}}|Return Amount}} must be settled (Para {{{{{1}}}|3(a)}}) by the close of business on the {{{{{1}}}|Regular Settlement Day}} relating to the date such demand is received (if received before the {{{{{1}}}|Notification Time}} (spoiler: usually 11 am, noon or 1pm)), or the {{{{{1}}}|Regular Settlement Day}} relating to the day after the date such demand is received (if received after the {{{{{1}}}|Notification Time}}).
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Regular Settlement Day: A “{{{{{1}}}|Regular Settlement Day}}” means the same {{{{{1}}}|Local Business Day}} — careful: as defined in the 1995 CSA, not the ISDA Master Agreement — on which the demand is made.
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Local Business Day: A “{{{{{1}}}|Local Business Day}}” (under the 1995 CSA) means, in the case of notices, a day on which banks are open in the address for the notice most recently specified by the Recipient. What if demand is made on a day that is not a {{{{{1}}}|Local Business Day}}? Simple: by dint of Section 12 of the ISDA Master Agreement, the notice will be deemed given on the next Local Business Day (as defined in the ISDA Master Agreement, not the 1995 CSA).
Easy.