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2016 ISDA Credit Support Annex (VM) (English law)
A Jolly Contrarian owner’s manual™
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Paragraph 11(b) in a Nutshell™
Use at your own risk, campers!
Full text of Paragraph 11(b)
11(b) Covered Transactions; Exposure
- 11(b)(i) The term “Covered Transactions” as used in this Annex includes any Transaction specified below that is entered into on or after [...], except as otherwise provided in the Confirmation of such Transaction:
- For purposes of the foregoing, the term “Covered Transactions” includes: [Any Transaction [that is any of the following] [Swap], [Security-Based Swap], [OTC Derivative], [Physically Settled FX Forward] or [Physically Settled FX Swap]] [and is not any of the following: [Swap], [Security-Based Swap], [OTC Derivative], [Physically Settled FX Forward] or [Physically Settled FX Swap]] ...]
- As used above:
- [“OTC Derivative” means an “OTC derivative” or “OTC derivative contract” as defined in Article 2(7) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (“EMIR”) other than one which constitutes (i) a “foreign exchange forward” as defined in Article 7(1)(a) of the final draft regulatory technical standards on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP under Article 11(15) of EMIR dated March 8, 2016 (the “EMIR RTS”) for so long as such transactions are subject to the transitional exemption from the variation margin requirements under Article 39(6) of the EMIR RTS or (ii) a single stock equity option or index option transaction as referred to in Article 39(7) of the EMIR RTS for so long as such transactions are subject to the transitional exemption from the variation margin requirements under Article 39(7) of the EMIR RTS.]
- [“Physically Settled FX Forward” means [...]]
- [“Physically Settled FX Swap” means [...]]
- [“Security-Based Swap” means a “security-based swap” as defined in Section 3(a)(68) of the U.S. Securities Exchange Act of 1934, as amended (“SEA”), and the rules adopted thereunder. For the avoidance of doubt, the term “Security-Based Swap” does not include a security-based swap that has been cleared by a “clearing agency” as such term is defined in Section 3(a)(23) of the SEA and the rules adopted thereunder.]
- [“Swap” means a “swap” as defined in Section 1a(47) of the U.S. Commodity Exchange Act, as amended (“CEA”), and the regulations adopted thereunder. For the avoidance of doubt, the term “Swap” does not include a swap that has been cleared by a “derivatives clearing organization” as such term is defined in Section 1a(15) of the CEA and the regulations adopted thereunder.]
- [For the purposes of the foregoing, a Transaction will be deemed to be entered into on or after the date specified in this Paragraph 11(b)(i) if an amendment, novation or other lifecycle event with respect to such Transaction would cause such Transaction to be entered into after such date under law applicable to either party requiring the collection or delivery of variation margin.]
- 11(b)(ii) “Exposure” has the meaning specified in Paragraph 10, unless otherwise specified here: [...]
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Content and comparisons
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Summary
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See also
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References