Definitions and Inconsistency - VM CSA Provision
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2016 VM CSA Anatomy™
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A paragraph of unremarkable, if unnecessary, throat-clearing, though marred by a bizarre for the avoidance of doubt rider which functions as both a non-sequitur — no one was talking about transfers here, much less was in any particular state of confusion about them, so why bring it up now? — but also the classic self-hack: rather than avoiding doubt, this rider is calculated to do nothing quite so much as introduce it. Wait: was I meant to be doubting something here? Should I have been confused? Have I missed something?
There is nothing a cheerful attorney likes more than to worry about things, and she will toss sleeplessly for nights on end, fully occupied by questions such as — is “delivery” of cash different from “payment” of it? Is there something legally significant about “payment” that I somehow missed, in Banking Law 302, in 1989?
Tell your legal eagles to relax. It won’t do any good, but you can tell them. To the best the JC can figure out, all this means is that a Transferor must physically part with its collateral, handing it bodily over to the Transferee.
There is an interesting question as to what this might mean if your counterparty is also your banker, and you direct it to transfer credit support into the bank account you maintain with it, meaning that legally the counterparty hasn’t done anything with the cash at all — not an unusual scenario, should you be a hedge fund and the counterparty your prime broker — but this will set your legal eagles off again, and we don’t want that. We are just getting started.