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2014 ISDA Credit Derivatives Definitions
A Jolly Contrarian owner’s manual™
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Section 10 in a Nutshell™
Use at your own risk, campers!
Full text of Section 10
Article 10. Effect of DC Resolutions
Section 10.1 Settlement Suspension. If, following the occurrence of an Event Determination Datebut prior to the Physical Settlement Date or, to the extent applicable, a Valuation Date, there is a DC Credit Event Meeting Announcement, the timing requirements of Sections 7.2 (Cash Settlement Date), 7.8 (Valuation Date), 8.1 (Physical Settlement), 8.10 (NOPS Cut-off Date), and 8.19 (Physical Settlement Period), as applicable, or any other Section of the Definitions that pertains to settlement, shall toll and remain suspended until the date of the relevant DC Credit Event Announcementor DC Credit Event Question Dismissal. During such suspension period, the parties are not obliged to, nor are they entitled to, take any action in connection with the settlement of any relevant Credit Derivative Transaction. Once the relevant DC Credit Event Announcementor DC Credit Event Question Dismissal, as applicable, has occurred, the relevant timing requirements of Sections 7.2 (Cash Settlement Date), 7.8 (Valuation Date), 8.1 (Physical Settlement), 8.10 (NOPS Cut-off Date), and 8.19 (Physical Settlement Period), as applicable, or any other Section of the Definitions that pertains to settlement that have previously tolled or been suspended shall resume on the Business Day following such public announcement by the DC Secretary with the parties having the benefit of the full day notwithstanding when the tolling or suspension began in accordance with Section 10.1.
Section 10.2 Effect of DC Resolutions. Any DC Resolution of the relevant Credit Derivatives Determinations Committee that is applicable to such Credit Derivative Transaction, including a DC Resolution that reverses a previous DC Resolution, shall be binding on Buyer and Seller :
- (a) provided that:
- (i) if the effect of a DC Resolution would be to reverse (A) a prior DC Resolution of the relevant Credit Derivatives Determinations Committee, (B) any determination made by the Calculation Agent that is effectively notified to the parties to the Credit Derivative Transactions prior to the fifth Business Day which immediately precedes the Successor Resolution Request Date or a Substitute Reference Obligation Resolution Request Date, as applicable, or (C) the occurrence of an Event Determination Date, that, in any case, has resulted in:
- (I) the identification of one or more Successors;
- (II) the identification of a Substitute Reference Obligation; or
- (III) the occurrence of an Auction Final Price Determination Date, Physical Settlement Date or Termination Date, as applicable, or to the extent of the occurrence of a Valuation Date or Delivery Date, as applicable, in each case, on or prior to the date that the DC Secretary publicly announces such DC Resolution of the relevant Credit Derivatives Determinations Committee,
then such DC Resolution shall not be effective for purposes of the Credit Derivative Transaction, or, in the case of a Valuation Date or Delivery Date only, shall not be effective to the extent that a Valuation Date or Delivery Date has occurred; and
- (ii) if Buyer and Seller have included any provision in the terms of the applicable Credit Derivative Transaction that seeks to amend or override the agreement contained in Section 10.2 by expressly referring in writing to Section 10.2 and which would otherwise be effective in accordance with the terms of the relevant Credit Derivative Transaction, then any DC Resolution shall not be effective for purposes of such Credit Derivative Transaction; and
- (b) notwithstanding:
- (i) that the Definitions, as supplemented, or any provisions incorporated in the related Confirmation, as applicable, may require such determination to be made by the Calculation Agent;
- (ii) any provision in the master agreement between Buyer and Seller that governs the relevant Credit Derivative Transaction and/or the related Confirmation, as applicable (but in each case, without prejudice to Section 10.2(a)(ii)), that describes an alternative mechanism for resolving, in the absence of agreement between Buyer and Seller, any matter that is Resolved by the relevant Credit Derivatives Determinations Committee;
- (iii) that in order to reach such DC Resolution, the relevant Credit Derivatives Determinations Committee may be required to Resolve one or more factual matters before being able to reach such DC Resolution; and
- (iv) any actual or perceived conflict of interest on the part of a DC Party , legal counsel or other third-party professional hired by such DC Party in connection with such DC Party ’s performance of its duties under the DC Rules.
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