Base Currency and Eligible Currency - CSA Provision

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CSA Anatomy


In a NutshellTM Section 11(a):

Template:Nutshell 1995 CSA 11(a) view template

1995 ISDA CSA full text of Section 11(a):

11(a) Base Currency and Eligible Currency.

11(a)(i)Base Currency” means United States Dollars unless otherwise specified here:
11(a)(ii)Eligible Currency” means the Base Currency and each other currency specified here:

view template

Related Agreements
Click here for the text of Section 11(a) in the 1995 English Law CSA
Click here for the text of Section 11(a) in the 2016 English Law VM CSA
Click here for the text of the equivalent, Section 13(a) in the 2016 NY Law VM CSA
Comparisons
Template:Csadiff 11(a)
Template:Nycsadiff 13(a)
Resources Full wikitext | Nutshell wikitext
Navigation 1 (Interpretation) | 2 (Credit Support Obligations) | 3 (Transfers, Calculations and Exchanges) | 4 (Dispute Resolution) | 5 (Title Transfer etc) | 6 (Default) | 7 (Representation) | 8 (Expenses) | 9 (Miscellaneous) | 10 (Definitions) | 11 (Elections and Variables)

Two interesting (lack of) design points here: Firstly, the fallback for the Base Currency is specified in the Paragraph 11 election schedule and not the pre-printed definition of Base Currency inside the csa itself. The election schedule is the bit you amend, so by the lights of the Document Design Subcommittee of ISDA’s crack drafting squadTM, you might expect your negotiated election to say: The Base Currency is United States dollars unless specified here: Pounds sterling.

This, it is submitted, would confuse someone not expecting it. Especially someone in a panic, who has just been sent a bad photocopy of a heavily amended fifteen-year-old ISDA and CSA of a counterparty whose credit is plummeting and told to quickly figure out how to close out this blessed agreement, with the head of risk breathes down her neck. Why, she will wonder, didn’t it just say, “Base Currency: Pounds sterling?”

Why indeed.

Point two is that, unlike the 1992 ISDA whose publication it quickly followed, the 1995 English Law CSA does at least think about a fallback Base Currency for those who have forgotten to specify one. But the fallback it chooses, for an English law agreement, is US dollars. The one demographic least likely to be trading under an English law ISDA Master Agreement are those whose home currency is USD.

Lastly, ISDA has taken advantage of none of the many redrafting opportunities it has had since 1994 to correct either of these irritations. The 2016 English law VM CSA and the 2016 NY Law VM CSA both take the same approach.