Scope of this Annex and the Other CSA - CSA Provision: Difference between revisions

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In the year of our Lord 2016, it is gratifying to see that the good people of {{tag|ISDA}} and their friends, relations, cherubim and seraphin, gog and magog etc., are all still as fearful of the language they learned at their mothers' knees as ever. “[[If any]]” makes four appearances in an eight line clause which doesn’t say much in the first place.
In the year of our Lord 2016, it is gratifying to see that the good people of {{tag|ISDA}} and their friends, relations, cherubim and seraphin, gog and magog etc., are all still as fearful of the language they learned at their mothers' knees as ever. “[[If any]]” makes four appearances in an eight line clause which doesn’t say much in the first place.
This seems to be contemplating those who wished to “grandfather” {{isdaprov|Transaction}}s which were already on foot at the time the [[regulatory margin]] obligation came into force, but which therefore preceded it and were out of scope for it. Cue a monstrously painful ''dual''-CSA regime where new transactions were margined under a new, [[regulatory margin]]-compliant {{2016csa}}, and old ones were allowed to roll off on the clapped out (but somehow better'', right?) {{1995csa}}.
No doubt this made sound commercial sense in 2015, a few years later, for all bar those with 30 year inflation swaps on the books, all this {{csaprov|Other CSA}} chat is just barnacle-encrusted codified confusion for everyone.
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*{{csaprov|Other CSA}}

Revision as of 11:30, 29 July 2019

CSA Anatomy™

1(b) Scope of this Annex and the Other CSA: The only Transactions which will be relevant for the purposes of determining “Exposure” under this Annex will be the Covered Transactions specified in Paragraph 11. Each Other CSA, if any, is hereby amended such that the Transactions that will be relevant for purposes of determining “Exposure” thereunder, if any, will exclude the Covered Transactions and the Transaction constituted by this Annex. Except as provided in Paragraph 9(h), nothing in this Annex will affect the rights and obligations, if any, of either party with respect to “independent amounts” or initial margin under each Other CSA, if any, with respect to Transactions that are Covered Transactions.

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Commentary

In the year of our Lord 2016, it is gratifying to see that the good people of ISDA and their friends, relations, cherubim and seraphin, gog and magog etc., are all still as fearful of the language they learned at their mothers' knees as ever. “If any” makes four appearances in an eight line clause which doesn’t say much in the first place.

This seems to be contemplating those who wished to “grandfather” Transactions which were already on foot at the time the regulatory margin obligation came into force, but which therefore preceded it and were out of scope for it. Cue a monstrously painful dual-CSA regime where new transactions were margined under a new, regulatory margin-compliant 2016 VM CSA, and old ones were allowed to roll off on the clapped out (but somehow better, right?) 1995 CSA.

No doubt this made sound commercial sense in 2015, a few years later, for all bar those with 30 year inflation swaps on the books, all this Other CSA chat is just barnacle-encrusted codified confusion for everyone.

See also

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