Local Business Day - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Resources and navigation Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 Events of Default: 5(a)(i) Failure to Pay or Deliver • 5(a)(ii) Breach of Agreement • 5(a)(iii) Credit Support Default • 5(a)(iv) Misrepresentation • 5(a)(v) Default Under Specified Transaction • 5(a)(vi) Cross Default • 5(a)(vii) Bankruptcy • 5(a)(viii) Merger without Assumption • Termination Events: 5(b)(i) Illegality • 5(b)(ii) Force Majeure Event • 5(b)(iii) Tax Event • 5(b)(iv) Tax Event Upon Merger • 5(b)(v) Credit Event Upon Merger • 5(b)(vi) Additional Termination Event Index: Click ᐅ to expand: ► 2002 ISDA ► 1992 ISDA Definition of Local Business Day in a Nutshell™ Use at your own risk, campers! “Local Business Day” means a General Business Day: (a) For performing one’s general obligations: where specified in the Confirmation and where any relevant settlement system is operating; (b) For working out when a Waiting Period expires: Where the Illegality or Force Majeure Event occurs, (c) For any other payment: Where the account is located and, the principal financial centre for the relevant currency; (d) For communications: For the recipient (and, for a Change of Account, where the new account will be located); and (e) For a Default under Specified Transaction: In the relevant locations for performance under the Specified Transaction. view template Full text of Definition of Local Business Day “Local Business Day” means (a) in relation to any obligation under Section 2(a)(i), a General Business Day in the place or places specified in the relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) for the purpose of determining when a Waiting Period expires, a General Business Day in the place where the event or circumstance that constitutes or gives rise to the Illegality or Force Majeure Event, as the case may be, occurs, (c) in relation to any other payment, a General Business Day in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment and, if that currency does not have a single recognised principal financial centre, a day on which the settlement system necessary to accomplish such payment is open, (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General Business Day but for the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction. Line breaks added to improve comprehension view template Related agreements and comparisons Related Agreements Click here for the text of Section Local Business Day in the 1992 ISDA Comparisons Click to compare this section in the 1992 ISDA and 2002 ISDA. Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Content and comparisons

The keen will have noticed that “Local Business Day” under an English law CSA is defined quite separately from “Local Business Day” as it is defined under the ISDA Master Agreement itself, whereas a Local Business Day under a New York law CSA, while separately defining the term, only goes on to defer to the original definition of LBD in the ISDA Master Agreement, pausing only to clarify that references to “payment” in the ISDA Master Agreement definiton are deemed to include Transfers under the CSA.

Why ISDA’s British crack drafting squad™ couldn’t have done this too, we can only wonder.

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Summary

How the business days work for demands under a Credit Support Annex

This should give you an insight into why lawyers find ISDA documentation so compelling.

• A Transferee may demand a Delivery Amount (Para 2(a)) or a Return Amount Para 2(b)) “on or promptly following a Valuation Date”.
• A “Valuation Date” means a day on which banks are open in at least one Valuation Date Location for each party.

• Each party can specify however many Valuation Date Locations it likes.
• Tip: the fewer you specifiy, the greater the chance none will be open on a given day, and you will be excused from a margin call, so don’t overdo it. One should be ample.

• Any Delivery Amount or Return Amount must be made (Para 3(a)) by the close of business on the Regular Settlement Day relating to the date such demand is received (if received before the Notification Time (spoiler - usually 11 am, noon or 1pm)), or the Regular Settlement Day relating to the day after the date such demand is received (if received after the Notification Time).
• A “Regular Settlement Day” means the same Local Business Day — careful: as defined in the 1995 English Law CSA, not the ISDA Master Agreement — on which the demand is made.
• A “Local Business Day” (under the 1995 English Law CSA) means, in the case of notices, a day on which banks are open in the address for the notice most recently specified by the Recipient.
• what if demand is made on a day that is not a Local Business Day? Simple: by dint of Section 12 of the ISDA Master Agreement, the notice will be deemed given on the next Local Business Day (as defined in the ISDA Master Agreement, not the 1995 English Law CSA).

Easy.

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See also

The many gorgeous, multi-hued variations on the business day can be enjoyed as follows:

• Business day - a general, cynical review;
• Business Day - GMSLA Provision
• Banking Day - GTMA Provision
• Local Business Day - ISDA Provision
• Local Business Day - CSA Provision
• Local Business Day - VM CSA Provision
• Local Business Day - IM CSD Provision
• Local Delivery Day - ISDA Provision

Spoiler: the ISDA one is, by far, the best.

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