2016 ISDA Credit Support Annex (VM) (English law)
A Jolly Contrarian owner’s manual
Paragraph 1 in a Nutshell™
Use at your own risk, campers!
Paragraph 1 in full
1(a) Definitions and Inconsistency. Capitalised terms not otherwise defined in this Annex or elsewhere in this Agreement have the meanings specified pursuant to Paragraph 10, and all references in this Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between this Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of any inconsistency between Paragraph 11 and the other provisions of this Annex, Paragraph 11 will prevail. For the avoidance of doubt, references to “transfer” in this Annex mean, in relation to cash, payment and, in relation to other assets, delivery.
1(b) Scope of this Annex and the Other CSA: The only Transactions which will be relevant for the purposes of determining “Exposure” under this Annex will be the Covered Transactions specified in Paragraph 11. Each Other CSA, if any, is hereby amended such that the Transactions that will be relevant for purposes of determining “Exposure” thereunder, if any, will exclude the Covered Transactions and the Transaction constituted by this Annex. Except as provided in Paragraph 9(h), nothing in this Annex will affect the rights and obligations, if any, of either party with respect to “independent amounts” or initial margin under each Other CSA, if any, with respect to Transactions that are Covered Transactions.
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Template:M comp disc 2016 CSA 1
Template:M summ 2016 CSA 1
Template:M sa 2016 CSA 1
Nomenclature: Being an annex to an ISDA Master Agreement, references to the “Agreement” means that particular ISDA Master Agreement; the “Annex” is the 2016 English law VM CSA and, if you were pedantic enough that you really felt the need to refer to it, the “Schedule” is the schedule to the ISDA Master Agreement.
Covered Transaction: As a concept, “Covered Transaction” only arrived in the 2016 English law VM CSA, in Paragraph 1(b).
Under the 1995 English Law CSA, the neatest way of describing whether a given set of Transactions is covered or not is to say something like:
“[SPECIFY] Transactions will [not] be relevant for purposes of determining “Exposure” under the 1995 English Law CSA.”