An amount equal to: Difference between revisions

Excellent [[celery]] that will fill out any drafting that looks a bit thin. It may look like — and is, truth be told — a pointless [[nominalisation]]<ref>in that it converts the verb “equals” to the noun “an amount equal to”.</ref>, but this will not stop [[Mediocre lawyer|assiduous attorneys]]  defending it with their miserable little lives:

:''“...on each Payment Date the Floating Amount shall]], [[unless otherwise agreed]], be reduced by [[an amount equal to]] such rate as the [[Calculation Agent]] [[and/or]] [[Determination Agent]], [[as the case may be]], shall calculate or determine, [[as the case may be]], to be the Floating Rate Payer's unadjusted cost of funding.”  

[[Profound ontological uncertainty]] — something in which, like anal retentiveness, derivatives practitioners tend to be steeped — is why. For, they will say, it isn't actually the borrower’s cost of funding you’re deducting — that is not a number but a (different) incorporeal, abstract concept which happens to resemble a number but is not one, and is therefore logically incapable of being deducted from something else by mathematical operation. The neat solution: add the phrase “[[an amount equal to]]”, which “monetises” this concept, turning it into something properly numeric that a fellow can articulate in pounds and pence.

Properly numeric I mean really.

Except that there’s a flaw in this logic: “equals” is a mathematical operator as surely as an addition or a subtraction is. It is no more (or less) susceptible to manipulation by ethereal concepts. If you can’t deduct a cost of funding from a rate, you can’t calculate an amount equal to it, either.