Early Termination - ISDA Provision: Difference between revisions

Early Termination - ISDA Provision (view source)

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→‎How the {{isdaprov|Close-out}} mechanism Works

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 ===How the {{isdaprov|Close-out}} mechanism Works===
 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.
-* 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).
+* 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 jurisdictions where [[close-out netting]] may be challenged in an insolvency but not before). (That is to say, this is one provision you should ''not'' insist on just because the other party insists upon it against you).
 * For what this optionality not to terminate means, and how controversial it can be, see the commentary to Section {{isdaprov|2(a)(iii)}}. <br>
-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.
+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 elected {{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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