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This is like {{isdaprov|Cross Default}}, but for non "borrowing" style transactions - for example [[swap|swap agreements]] agreements and [[repo]]s, '''but only transactions between the two counterparties and their referenced {{isdaprov|Credit Support Provider}}s and {{isdaprov|Specified Entities}}'''. | This is like {{isdaprov|Cross Default}}, but for non "borrowing" style transactions - for example [[swap|swap agreements]] agreements and [[repo]]s, '''but only transactions between the two counterparties and their referenced {{isdaprov|Credit Support Provider}}s and {{isdaprov|Specified Entities}}'''. | ||
If a [[Counterparty]] (or its {{isdaprov|Credit Support Provider}} or {{isdaprov|Specified Entity}}) experiences an {{isdaprov|Event of Default}} under a [[swap]] agreement (or other transaction falling within the definition of {{isdaprov|Specified Transaction}}, which is typically wide - but check the Agreement!) with you, this constitutes an {{isdaprov|Event of Default}} under the {{isdama}}. | If a [[Counterparty]] (or — sigh — its {{isdaprov|Credit Support Provider}} or {{isdaprov|Specified Entity}}) experiences an {{isdaprov|Event of Default}} under a [[swap]] agreement (or other transaction falling within the definition of {{isdaprov|Specified Transaction}}, which is typically wide - but check the Agreement!) with you, this constitutes an {{isdaprov|Event of Default}} under the {{isdama}}. | ||
====Acceleration, not Default==== | ====Acceleration, not Default==== | ||
{{tag|DUST}} is triggered by an ''acceleration following an'' event of default under the {{isdaprov|Specified Transaction}}, not upon default itself (except where that happens on maturity - see drafting point below). Since the {{isdaprov|Specified Transaction}} is between you and the other party to the {{isdama}}, there is no great loss - it is within your gift to accelerate the other contract - and to achieve set-off you would have to do so anyway. This is less drastic than the corresponding {{isdaprov|Cross Default}} provision, which imports all the {{isdaprov|Events of Default}} from all {{isdaprov|Specified Indebtedness}} into the present one<ref>I should say I am grateful to my correspondent Nick for his helpful suggestion here. I don't get many correspondents so it is extra special when one writes in with actual useful feedback. Thanks Nick! (To my other correspondents: hi, nice to hear from you too, but no I have not been in a car accident recently.) </ref>, even if the counterparty to the defaulted contract has itself waived its rights to exercise. | {{tag|DUST}} is triggered by an ''acceleration following an'' event of default under the {{isdaprov|Specified Transaction}}, not upon default itself (except where that happens on maturity - see drafting point below). Since the {{isdaprov|Specified Transaction}} is between you and the other party to the {{isdama}}, there is no great loss - it is within your gift to accelerate the other contract - and to achieve set-off you would have to do so anyway. This is less drastic than the corresponding {{isdaprov|Cross Default}} provision, which imports all the {{isdaprov|Events of Default}} from all {{isdaprov|Specified Indebtedness}} into the present one<ref>I should say I am grateful to my correspondent Nick for his helpful suggestion here. I don't get many correspondents so it is extra special when one writes in with actual useful feedback. Thanks Nick! (To my other correspondents: hi, nice to hear from you too, but no I have not been in a car accident recently.) </ref>, even if the counterparty to the defaulted contract has itself waived its rights to exercise. |