Cross acceleration - ISDA Provision: Difference between revisions

Cross acceleration - ISDA Provision (view source)

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 :''I believe such downgrade requests should only be considered favourably if specific foreseeable circumstances justify them ... or if your counterparty gives written confirmation that cross acceleration applies to all its agreements and will do so in the future. This is because if even one counterparty has {{isdaprov|Cross Default}} it would be in pole position to trigger its termination rights.
-On this last point the learned author is, technically, correct, you are marginally worse off if you have conceded to [[cross acceleration]] and other swap counterparties have not. They can beat you, and your counterparty’s main relationship bank, to the punch, assuming they are cowboys who view a relationship contract like an {{isdama}} as something that it should be a race to close out. Brokers that the [[JC]] knows don’t tend to think that way. They have compliance officers who will quail at the thought of not treating their customers fairly. In any case the fact that this ''could'' happen ''just illustrates how stupid the concept of cross default is''. ''Especially'' in our enlightened age of zero-threshold, [[variation margin|daily margined]] unexotic swap contracts. ''Especially'' given the extreme conceptual difficulty of even gathering enough information to work out whether you even ''can'' exercise your stupid cross default right. (Just how a third party would ever be able to assess the value of defaulted Specified Indebtedness has never been explained to this old goat).
+On this last point the learned author is, technically, correct: you are marginally worse off if you have conceded to [[cross acceleration]] and other swap counterparties have not. They can beat you, and your counterparty’s main relationship bank, to the punch, assuming they are cowboys who view a relationship contract like an {{isdama}} as something that it should be a race to close out. Brokers that the [[JC]] knows don’t tend to think that way. They have compliance officers who will quail at the thought of not treating their customers fairly. In any case the fact that this ''could'' happen ''just illustrates how stupid the concept of cross default is''. ''Especially'' in our enlightened age of zero-threshold, [[variation margin|daily margined]] non-exotic swap contracts. ''Especially'' given the extreme conceptual difficulty of even gathering enough information to work out whether you even ''can'' exercise your stupid cross default right. (Just how a third party would ever be able to assess the value of defaulted Specified Indebtedness has never been explained to this old goat).
 This is angel-on-the-head-of-a-pin stuff indeed.