(a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is not a Transaction under this Agreement but
(ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made,
(b) any combination of these transactions and
(c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.
NB - paragraph breaks do not appear in the printed form. view template
Click here for the text of Section Specified Transaction Definition in the 1992 ISDA
Specified Transactions are those financial markets transactions between you and your counterparty other than those under the present ISDA Master Agreement, default under which justifies the wronged party closing out the present ISDA. “Specified Transactions” therefore specifically excludeTransactions under the ISDA itself for the sensible reason that a default under those is covered by by Failure to Pay or Deliver and Breach of Obligation. It might lead to a perverse result if misadventure under an ISDA Master AgreementTransaction which did not otherwise amount to an Event of Default, became one purely as a result of the DUST provision, however unlikely that may be.
Under the 2002 ISDA it is expressed with far more of ISDA's signature sense of the Byzantine, expanding the basic definition to specifically include futurescredit derivatives, repo, stock lending, weather derivatives,[1]NDFs, transactions executed under terms of business and other commodities or similar transactions that is presently or in future becomes common in the financial markets.
At a glance: differences between the 1992 ISDA and the 2002 ISDA. As you can see a collossal improvement.
Enter the fiddlers
ISDA’s verbal profligacy won’t stop enthusiastic credit officers amplifying the list even further, of course. What about precious metal transactions? Letter of credit reimbursement obligations? Indebtedness? What indeed?
An odd cognitive dissonance
The framers of DUSTdeliberately neglected to include borrowed money or indebtedness, because these are picked up under the wider scope of the Cross Default provision which, of course, applies to indebtedness your counterparty owes to anyone, not just you. Still, there is weirdness: Cross Default contemplates a Threshold Amount before it can be triggered. DUST doesn’t. So this leads to an odd gap:
A default under any other Specified Transaction between them would even if a smaller quantum of default. This is kind of counterintuitive. If you were to define DUST to include indebtedness, of course, you'd be covered.
↑Oh, look! Anyone remember Enron? Anyone feeling nostalgic for the good old days when men were men, fraud was fraud, financial accountants were profit centres and anything seemed possible?
