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| {{isdasnap|5(a)(v)}} | | {{newisdamanual|5(a)(v)}} |
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| ==Commentary==
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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}}'''.
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| 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 ISDA.
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| * '''Default, Not Acceleration''': note it is triggered by an event of default under the {{isdaprov|Specified Transaction}}, not a acceleration ''following'' an event of default. So even if you don't close out under the {{isdaprov|Specified Transaction}}, you may still close out under this [[ISDA]] (and vice versa) - in this way it imports all the Events of Default from all {{isdaprov|Specified Transaction}}s into the present one.
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| *'''What if I do "jump the gun"?''': could a wrongfully submitted notice of default be treated as a [[repudiatory|repudiation]]/[[anticipatory breach]] by the "[[non-defaulting party]]" giving the other party at least the right to withhold payments on the basis that this would constitute a {{isdaprov|Potential Event of Default}} by the party submitting the notice? There's not much law on point, but the starting point is "no" - it would simply be an ineffective notice. '''However''', a non-payment on the basis of an ineffective notice would be impermissible and may itself amount to a Failure to Pay. But as to the mere dispatch of the notice itself, there is relatively recent case law (albeit in the bond world) stating that an acceleration notice that is submitted wrongfully, i.e. when no actual event of default, is merely ineffective and does not give rise to a claim for breach of contract/ damages from "defaulting party". Clearly this has not been considered in context of ISDA per se (and may be nuances here that would lead to different result) but at it is a start.
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| ===Comparison with {{isdaprov|Cross Default}}===
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| *No requirement for a {{isdaprov|Threshold Amount}} to be hit before trigger: any default will trigger it.
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| *Only relates to transactions between the two counterparties (or any {{isdaprov|Specified Entity}}) - a default by a counterparty under a derivatives transaction *with a third party* would not trigger this clause.
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| {{isdaanatomy}}
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| *[http://sharepoint/sites/documentationunitlegal/Wiki/Wiki%20Pages/ISDA.aspx Doc Unit knowhow Wiki]
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| *[http://www.stroock.com/SiteFiles/Pub175.pdf The Importance Of Being Specified: Designating Affiliates - Strook]
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| {{Cat2|Events of Default|Policies - Treasury}}
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