Independent Amount - CSA Provision

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Discussion=

Particularly where underlying trades and markets are volatile, you might expect to see a lot of customisation here.

• The independent amount might be calculated by reference to a given multiplier for a given asset (or type of assets - it is not uncommon to see tiering in FX transactions, for example, where Transactions on currencies in the highest Tier might have a low (say 2%) multiplier, and Transactions on currencies in the lowest Tier might carry a a 100% multiplier).
• Especially where one counterparty is providing access to markets for the other party (so called synthetic prime brokerage) there may be a provision that the calculation agent can adjust tiers, multipliers, and the assets which are elgible for each tier in its discretion, and with effect to existing as well as new transactions. This can have the effect of retroactively adjusting Independent Amounts, in whcih case the difference can be called under the ordinary Transfer provisions.

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