11(g)(ii) - VM CSA Provision

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ISDA 2016 English Law VM Credit Support Annex

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For corresponding provisions in other CSAs see the table 👇

11(g)(ii) in a Nutshell

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Original text:

11(g)(ii) Transfer of Interest Payment (VM) or application of Interest Amount (VM).
Interest Transfer: [Applicable/Not Applicable]
Interest Payment Netting: [Applicable/Not Applicable]

[The transfer of an Interest Payment (VM) by the Interest Payer (VM) will be made on [the last Local Business Day of each calendar month] [and on any Local Business Day that a Return Amount (VM) consisting wholly or partly of cash is transferred to the Transferor pursuant to Paragraph 2(b)]. The transfer of an Interest Payment (VM) by the Interest Payer (VM) will be made on [the last Local Business Day of each calendar month] [and on any Local Business Day that a Delivery Amount (VM) consisting wholly or partly of cash is transferred to the Transferee pursuant to Paragraph 2(a)].]

Interest Adjustment: [Applicable/Not Applicable]

[The accrued Interest Amount (VM) will be added to the Credit Support Balance (VM) on [the last Local Business Day of each calendar month][each day].]

The varieties of ISDA CSA
Subject 1994 NY 1995 Eng 2016 VM NY 2016 VM Eng 2018 IM Eng
Preamble Pre Pre Pre Pre Pre
Interpretation 1 1 1 1 1
Security Interest 2 - 2 - 2
Credit Support Obligations 3 2 3 2 3
Transfers, Calculations and Exchanges - 3 - 3 -
Conditions Precedent, Transfer Timing, Calculations and Substitutions 4 - 4 - 4
Dispute Resolution 5 4 5 4 5
Holding and Using Posted Collateral 6 - 6 - 6
Transfer of Title, No Security Interest - 5 - 5 -
Events of Default 7 6 7 6 7
Rights and Remedies 8 - 8 - 7
Representations 9 7 9 7 9
Expenses 10 8 10 8 10
Miscellaneous 11 9 11 9 11
Definitions 12 10 12 10 12
Elections and Variables 13 11 13 11 13

Resources and Navigation

Index: Click to expand:

Overview

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Summary

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One might query whether “Daily Interest Compounding” should apply.

Interest compounds anyway at the end of each specified interest period (because it is paid out or added to the Credit Support Balance (VM), depending on which election you made at 11(g)(ii). If that period is “daily” then there's nothing really to be gained by Daily Interest Compounding. If the Interest Period is longer than that, there may be — but in the present environment (which, as those of you who lived through the Weimar Republic[1] may recall, CAN MOST DEFINITELY CHANGE) — the thought of daily compounding 1/365th of the bugger all interest you're getting paid anywaymight seem like a fight it’s not worth dying in a ditch about[2].

See also

References

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See also

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References

  1. NONE of you lived through the Weimar Republic, by the way.
  2. Be assured, though - your lawyers will disagree.