Other Posted Support (VM) - NY VM CSA Provision

2016 ISDA Credit Support Annex (VM) (New York law) A Jolly Contrarian owner’s manual™ Go premium Overview — Summary — Premium — See also — Wikitext Crosscheck: →NY OG →Eng OG →NY VM →Eng VM →Eng IM Other Support in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. Original text “Other Eligible Support (VM)” means, with respect to a party, the items, if any, specified as such for that party in Paragraph 13. “Other Posted Support (VM)” means all Other Eligible Support (VM) Transferred to the Secured Party that remains in effect for the benefit of that Secured Party. The varieties of ISDA CSA Subject 1994 NY 1995 Eng 2016 VM NY 2016 VM Eng 2018 IM Eng Preamble Pre Pre Pre Pre Pre Interpretation 1 1 1 1 1 Security Interest 2 - 2 - 2 Credit Support Obligations 3 2 3 2 3 Transfers, Calculations and Exchanges - 3 - 3 - Conditions Precedent, Transfer Timing, Calculations and Substitutions 4 - 4 - 4 Dispute Resolution 5 4 5 4 5 Holding and Using Posted Collateral 6 - 6 - 6 Transfer of Title, No Security Interest - 5 - 5 - Events of Default 7 6 7 6 7 Rights and Remedies 8 - 8 - 8 Representations 9 7 9 7 9 Expenses 10 8 10 8 10 Miscellaneous 11 9 11 9 11 Definitions 12 10 12 10 12 Elections and Variables 13 11 13 11 13 Resources and Navigation Index: Click ᐅ to expand: CSA

Comparisons

The definition is identical for the two New York law security interest CSAs. There is no equivalent in the title transfer CSAs.

Basics

Other Eligible Support

This is generally going to be Credit Support in a format that is not a transferable financial instrument: Guarantees, letters of credit, Keep Well letters, that kind of thing. In the ordinary cut and thrust of collateral terms, this will not be common, because (a) it is a faff, and (b) a dealer cannot generally rehypothecate it, and therefore raise cash or cash-like assets against it to defray the funding costs of providing derivative exposure.

Dealers generally won’t like Other Posted Support, won’t specify much of it in your Elections schedule, and will (rightly) charge customers who insist on providing it more, because their own internal funding costs will be higher.

Other Eligible Support will generally function as a static Independent Amount rather than variation margin.

Less of an issue in the 2016 VM CSA world as Credit Support is generally assumed to be cash, and generally less of a thing in the modern world, because initial margin tends to be more dynamic and Transaction specific than was originally contemplated. These are impressionistic beliefs and no doubt someone will correct me.

Other Posted Support

Other Posted Support is to Other Eligible Support as Posted Collateral is to Eligible Collateral: Other Eligible Support provides the universe of allowed forms of non Collateral that can be provided as Credit Support under the CSA; Other Posted Support means the heavenly bodies in that universe that have actually been preferred as Credit Support.

What is this alternative universe, then, and why is it different to Posted Collateral? Well, we think it is things that are not readily transferable, negotiable instruments, but nonetheless function as a credit mitigant. We discuss some candidates in the premium content section.

Premium content

Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇 JC’s “nutshell” summary of the clause Background reading and long-form essays Template:Csa Other Support premium