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Long-form confirmation: Difference between revisions
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A long form | {{a|isda|}}A [[long form confirmation]], or “'''{{tag|LFC}}'''”, generally refers to the documentation for a financial transaction between two parties which have not (yet) formally signed a [[master agreement]] for that type of transaction. Instead they document the trade on a “long form” which deems a basic version of the relevant master agreement be in existence between the parties for the purposes of the transaction. | ||
====Example: ISDA LFC==== | ====Example: ISDA LFC==== | ||
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====Drawbacks==== | ====Drawbacks==== | ||
While {{tag|LFC}}s | While {{tag|LFC}}s “do the job”, they're not ideal for a number of reasons: | ||
*They incorporate the basic ISDA protections whcih are in the preprinted {{isdama}}. However, most counterparties significantly enhance these protections with additional provisions and elections in the {{isdaprov|Schedule}} and with a {{csa}}. The standard form LFC does not capture any such enhancements, and does not have a {{csa}}. | *They incorporate the basic ISDA protections whcih are in the preprinted {{isdama}}. However, most counterparties significantly enhance these protections with additional provisions and elections in the {{isdaprov|Schedule}} and with a {{csa}}. The standard form LFC does not capture any such enhancements, and does not have a {{csa}}. | ||
*The standard LFC deems eachy separate transaction to be executed under s | *The standard LFC deems eachy separate transaction to be executed under s “stand-alone” {{isdama}}. Without additional amendment, there would not be cross-transactional [[close-out netting]] between two LFCs exectuted with the same party (though this language may be overcome provided there is some "aggregation language" in every LFC, and every LFC has the same designated {{isdaprov|Termination Currency}}). | ||
{{ | {{sa}} | ||
*[[FWMD Top Trumps]] | |||