Regular Settlement Day - VM CSA Provision

ISDA 2016 English Law VM Credit Support Annex A Jolly Contrarian owner’s manual™ Go premium Crosscheck: For corresponding provisions in other CSAs see the table 👇 Regular Settlement Day 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. Original text: edit “Regular Settlement Day” means, unless otherwise specified in Paragraph 11, the same Local Business Day on which a demand for the transfer of Eligible Credit Support (VM) or Equivalent Credit Support (VM) is made. 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 - 7 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: 1994 NY CSA 1995 CSA 2016 VM CSA

Overview

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“Regular Settlement Day” in the 2016 VM CSA takes over from “Settlement Day” in the 1995 CSA. Cash moves same day, rather than next day, so is pretty bracing for those with lax collateral ops teams.

Should we talk about how there is also a separate definition of Settlement Day in the 2016 VM CSA that does something entirely different? I guess we probably should, but we’re not going to, since it just makes me sad.

Summary

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Not entirely persuaded the Regular Settlement Day concept works as a piece of technology but doubt anyone would take the point. In Para 3 it keys off the day on which a demand is made, if made before the Notification Time, but the day later, if made after the Notification Time.

“The same Local Business Day on which a demand for the Transfer of Eligible Credit Support (VM) or Posted Credit Support (VM) is made...”

Does that work if the day on which a demand is made is not in fact a Local Business Day?

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• JC’s “nutshell” summary of the clause
• Background reading and long-form essays

See also

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• Transaction terminations and VM
• Transfers, Calculations and Exchanges for a blow-by-blow account of the timing of CSA demands.