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| {{fullanatopen|isda|{{tocbuilder|ISDA|2002|6}}}} | | {{newisdamanual|6}} |
| ===No general termination right under the {{isdama}}===
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| Unlike the {{gmsla}} and many other — ahh, ''less sophisticated'' [[master agreements]]s<ref>Yes; there is some inter-[[industry association]] bitterness and snobbery here.</ref> — the {{isdama}} doesn’t have a general termination right of this sort ''at all''. You can ''only'' terminate {{isdaprov|Transactions}}, not the [[master agreement]] construct which sits around them. The empty vessel of a closed-out ISDA thus remains for all eternity as an immortal, ineffectual husk. This is to do with paranoid fears about the efficacy of the ISDA’s sainted [[close-out netting]] terms if you do terminate the agreement — meh; maybe — but I like to think it is because, before he was cast out from heaven, the [[Dark Lord]]<ref>Sauron, Beelzebub, [[Nosferatu]], [[Lehman Brothers]] etc.</ref> made plans to unleash his retributive fury upon the world through a sleeping army of wight-walker zombie ISDAs, doomed to roam the earth until the [[Omega|day of judgment]], ''apropos'' nothing but ''there'', not alive, but un-dead, ready to reanimate and rally to the Dark Lord’s banner and rain apocalyptic hell on the armies of men.
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| ===How the {{isdaprov|Close-out}} mechanism Works===
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| An {{isdaprov|Event of Default}} gives the {{isdaprov|Non-defaulting Party}} a right (but not an obligation) to designate an {{isdaprov|Early Termination Date}} with respect to all outstanding {{isdaprov|Transactions}} on not more than 20 days' notice.
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| * Note that {{isdaprov|Automatic Early Termination}} removes that optionality in the event of a counterparty's insolvency and is therefore sub-optimal from the {{isdaprov|Non-defaulting Party}}'s perspective, and thus should only be employed where the consequences of not having it would be worse (e.g. in jurisdictons where [[close-out netting]] may be challenged in an insolvency but not before). (That is to say, this is one provision you should {{isdaprov|not}} insist on just because the other party insists upon it against you).
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| * For what this optionality not to terminate means, and how controversial it can be, see the commentary to Section {{isdaprov|2(a)(iii)}}. <br>
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| Once all {{isdaprov|Transactions}} are terminated, you move to Section {{isdaprov|6(e)}} which directs how to value the transactions (it depends on who is the Defaulting Party, and whether you have alected {{isdaprov|Loss}} or {{isdaprov|Market Quotation}}, and {{isdaprov|First Method}} or {{isdaprov|Second Method}}. Under the {{2002ma}} it is much easier.
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| {{ref}}
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