Reference Market-makers - 1992 ISDA Provision

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1992 ISDA Master Agreement
A Jolly Contrarian owner’s manual

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Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger Without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Tax Event5(b)(iii) Tax Event Upon Merger5(b)(iv) Credit Event Upon Merger5(b)(v) Additional Termination Event

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Definition of Reference Market-makers in a Nutshell
Use at your own risk, campers!

Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith who meet its general credit standards and, ideally, are based in the same city.
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Full text of Definition of Reference Market-makers

Reference Market-makers” means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city.
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Related Agreements
Click here for the text of Section NA in the 2002 ISDA
Nothing to compare, folks!

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There is no such term in the 2002 ISDA.


Reference Market-makers are theoretically important figures if you are engaged in the valiant but futile pursuit of obtaining a Market Quotation, which, that notion having been abolished by the 2002 ISDA, is something you're only likely to be doing under a 1992 ISDA.

There are some puzzling aspects to the work of ISDA’s crack drafting squad™, readers, but few more so than this. Okay, it was a kinder, stupider time, and the ’squad evidently held the sincere if deluded belief that other dealers would have the faintest interest in spending their day giving you hypothetical marks so you can close out your busted ISDA Master Agreements — weirder things happened back in the day[1] even if they wouldn’t happen now — but okay, if you are going to have some criteria for selecting a dealer quote, at least have it make some sense. What relevance would their eligibility for your loan have, or that their office is in the same city?

We think we know what this was about. These are meant to be firm bids, that a party could trade on, and thereby take exposure to that party for the duration of the trade. And in 1992 daily, zero-threshold variation margin by force of regulation was not the thing. But even so, this is mightily strange way of saying it. And perhaps, in 1992, around the world, thoughts did not fly, in the twinkling of an eye, as they do now, so there might have been some benefit to having a local chap you could raise on the telex and have him consider your offer.

Anyway, all such frippery put to rest with the no-nonsense, Web 2.0-compliant, Close-out Amount-equipped 2002 ISDA.

See also