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What can we learn from this: | What can we learn from this: | ||
==Litigation takes ages== | ===Litigation takes ages=== | ||
Here we are in the year of our Lord 2023, the [[Lehman]] [[horcrux]] was buried deep into the misty grags [[Iron Mountain]] some 15 years ago — that is ''two'' [[limitation period]]s — and we are still conducting litigation about how to close out and value an {{isdama}}, a master agreement that presides over some ''trillions'' of financial instruments each year. | Here we are in the year of our Lord 2023, the [[Lehman]] [[horcrux]] was buried deep into the misty grags [[Iron Mountain]] some 15 years ago — that is ''two'' [[limitation period]]s — and we are still conducting litigation about how to close out and value an {{isdama}}, a master agreement that presides over some ''trillions'' of financial instruments each year. | ||
==No-one really understands the practicalities of how ISDAs close out== | ===No-one really understands the practicalities of how ISDAs close out=== | ||
This is, of course, | This is, of course, because shots are not usually fired in the termination of an {{isdama}}. And we suspect the sorts of instruments traded under ISDAs are, by and large a lot more vanilla and liquid than tranched [[CDO]]s. | ||
==“Dealer polls” are not a thing== | ===When hair is on fire all bets are off=== | ||
As we have written elsewhere, {{isdama}} was drafted by committee in a time of peace, is negotiated in a time of prosperity and with hopeful expectation, and is often closed out in a time of [[apocalypse]] when it is not just the {{isdaprov|Defaulting Party}} who is preparing to meet its maker, but the {{isdaprov|Non-Defaulting Party}} and, as like as not, those putative {{isda92prov|Reference Market-makers}} too. Lions are lying down with lambs, plagues of locusts swarm the land and risk officers’ grasp of commercial and economic fundamentals — tenuous at the best of time — disconnects from reality altogether. There was a passing reference to our old friend Section {{isda92prov|2(a)(iii)}} | |||
===“Dealer polls” are not a thing=== | |||
Oh, they are a ''[[legal contract]]'' thing, totally: they are just not a “this exists in the real world of derivatives trading” thing. The fact that so many legal contracts rely for their successful conclusion upon a dealer poll as a means of resolving valuationdisputes — the {{isdama}} does, as does the {{gmsla}} and the {{gmra}} — provision and no-one knows this, really only goes to show how pointless and falsely comforting is much of the [[verbiage]] that accompanies the construction and execution of modern financial instruments. | Oh, they are a ''[[legal contract]]'' thing, totally: they are just not a “this exists in the real world of derivatives trading” thing. The fact that so many legal contracts rely for their successful conclusion upon a dealer poll as a means of resolving valuationdisputes — the {{isdama}} does, as does the {{gmsla}} and the {{gmra}} — provision and no-one knows this, really only goes to show how pointless and falsely comforting is much of the [[verbiage]] that accompanies the construction and execution of modern financial instruments. | ||