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No Agency - ISDA Provision: Difference between revisions
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{{isdaanat|3(g)}} | {{isdaanat|3(g)}} | ||
You might like our articles about [[principal]]s and [[agent|agents]], [[undisclosed agent]]s, [[undisclosed principal]]s and all that good stuff. | You might like our articles about [[principal]]s and [[agent|agents]], [[undisclosed agent]]s, [[undisclosed principal]]s and all that good stuff. | ||
In practice, many {{isdama}}s are entered by agents | |||
===Investment managers as agents=== | |||
In practice, many {{isdama}}s ''are'' entered by agents — [[investment manager]]s and [[asset manager]]s — on behalf of underlying principals — [[investment fund]]s, and institutional clients who have appointed them as discretionary [[investment adviser]]s. | |||
These [[manager]]s often enter transactions in aggregate and only allocate them to their underlying [[principal]]s later in the day. This means that the [[broker]] will have a nervous few hours before it knows whom it is allowed to sue, though general principles of [[agency]] — in particular liability for an [[undisclosed principal]] —mean the [[agent]] is not quite so footloose and fancy-free as many seem to believe they are. | |||
In a nutshell it is not the end of the world if your counterpart refuses to renounce all agency, as long as you set up the accounts correctly with the underlying principals, and the firm has a robust approach to trade allocation. | In a nutshell it is not the end of the world if your counterpart refuses to renounce all agency, as long as you set up the accounts correctly with the underlying principals, and the firm has a robust approach to trade allocation. | ||