Affected Transactions - ISDA Provision
Overview
The provisions are identical but for reference to the newly added Force Majeure Termination Event and also a cheeky caveat relating to an Illegality or Force Majeure which affects only the Credit Support Document, and here the “leave no detail, however tiresome, unconsidered” department of ISDA’s crack drafting squad™ caters for the eventuality that your Credit Support Document provides credit support for some, but not, all Transactions.
Seeing how third party credit support generally works under an ISDA Master Agreement — it only comes into play once Transactions have been closed out, and there are no Transactions left, Affected or otherwise[1] this does seem a rather fussy detail; all the more so now in the age of regulatory variation margin. I mean, who provides credit support for individual Transactions under a master agreement specifically designed to achieve cross-transactional closeout netting?
Hold your letters: I am sure you can think of some reason.
Summary
Note that for Additional Termination Events and Credit Event Upon Merger, all Transactions are automatically caught, and if you want to capture just certain Transactions, you’ll need to tweak this definition too.
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- The JC’s famous Nutshell™ summary of this clause
See also
References
- ↑ The notable exception being a New York law Credit Support Annex of course.