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Close-out Amount - ISDA Provision: Difference between revisions
Close-out Amount - ISDA Provision (view source)
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==Text== | ==Text== | ||
===Summary=== | |||
In a nutshell the {{2002ma}} amounts to this: | |||
{{box| | |||
“Close-out Amount” means, with respect to a Terminated Transaction and a Determining Party, the Expenses the Determining Party would incur (expressed as a positive) or gains the Determining Party would realise (expressed as a negative) under prevailing circumstances in replacing, (a) the material terms of that Terminated Transaction, including the payments and deliveries required thereunder that would, but for the occurrence of the Early Termination Date, have been required after that date and (b) the option rights of the parties in respect of that Terminated Transaction. <br> | |||
Any Close-out Amount will be determined by the Determining Party (or its agent), in good faith and using commercially reasonable procedures to produce a commercially reasonable result. <br> | |||
The Determining Party may determine a Close-out Amount for any group of Terminated Transactions but, in the aggregate, for not less than all Terminated Transactions. Each Close-out Amount will be determined as of the Early Termination Date or such later date as would be commercially reasonable. <br> | |||
Unpaid Amounts in respect of a Terminated Transaction and Expenses are to be excluded in all determinations of Close-out Amounts. <br> | |||
In determining a Close-out Amount, the Determining Party may consider any relevant information, including, without limitation: <br> | |||
(i) quotations for replacement transactions supplied by third parties that may take into account the Determining Party's creditworthiness and the terms of any documentation, between the Determining Party and the third party; <br> | |||
(ii) relevant market data supplied by one or more third parties; or <br> | |||
(iii) information as described above from internal sources if it is of the same type used by the Determining Party in the regular course of its business for the valuation of similar transactions. <br> | |||
unless the Determining Party reasonably believes that they are not readily available or would produce a result that would not satisfy the standards and procedures described in this definition. <br> | |||
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===[[1992 ISDA Master]] Agreement=== | ===[[1992 ISDA Master]] Agreement=== | ||
Close-out amount concept doesn't exist under the [[1992 ISDA Master]]. Instead, terminated transactions are determined according to {{isdaprov|Market Quotation}} or {{isdaprov|Loss}}. {{isdacomparison}} | Close-out amount concept doesn't exist under the [[1992 ISDA Master]]. Instead, terminated transactions are determined according to {{isdaprov|Market Quotation}} or {{isdaprov|Loss}}. {{isdacomparison}} | ||