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1994 ISDA Credit Support Annex (New York law)
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Paragraph 3 in a Nutshell™
Use at your own risk, campers!
Full text of Paragraph 3
Para 3 Credit Support Obligations
3(a) Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Pledgor’s Minimum Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible Credit Support having a Value as of the date of Transfer at least equal to the applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the “Delivery Amount” applicable to the Pledgor for any Valuation Date will equal the amount by which:
- 3(a)(i) the Credit Support Amount exceeds
- 3(a)(ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party.
3(b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Secured Party’s Minimum Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted Credit Support specified by the Pledgor in that demand having a Value as of the date of Transfer as close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the “Return Amount” applicable to the Secured Party for any Valuation Date will equal the amount by which:
- 3(b)(i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds
- 3(b)(ii) the Credit Support Amount.
- “Credit Support Amount” means, unless otherwise specified in Paragraph 13, for any Valuation Date (i) the Secured Party’s Exposure for that Valuation Date plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any, minus (iii) all Independent Amounts applicable to the Secured Party, if any, minus (iv) the Pledgor’s Threshold; provided, however, that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit Support Amount yields a number less than zero.
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Some structural changes, to reflect that a 1995 CSA is title transfer arrangement (hence “Transferee” and “Transferor”) while the 1994 NY CSA is a pledge and rehypothecation arrangement — i.e., as the JC likes to call it, “title transfer for Americans” — and refers to Pledgor and Secured Party.
Thus, also, the “Credit Support Balance” in the 1995 CSA is “all Posted Credit Support held by the Secured Party” in the 1994 NY CSA. The English law document gets itself all tangled up in as-yet-undelivered-but-pending Return Amounts and so on. Thius may have sonething to do with the nature of pledged collateral, which is only “held” against title transfer collateral which is outright “owned”. It may also just be outright pedantry, on the part of ISDA’s crack drafting squad™, UK branch, of course. I don’t know.
See also
Template:M sa 1994 NY CSA 3
References