Credit mitigation: Difference between revisions

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These [[events of default]] live in the pre-printed the agreement, and tend not to be negotiated (except perhaps [[cross-default]], and that's a whole different story).
These [[events of default]] live in the pre-printed the agreement, and tend not to be negotiated (except perhaps [[cross-default]], and that's a whole different story).
====[[Additional termination events]]====
====[[Additional termination events]]====
We also throw in customised “[[additional termination event|additional termination events]]” tailored to the idiosyncrasies of each counterparty. For example, for [[hedge fund]]s we may require “key person” events allowing termination if named individuals cease to be associated with the fund; [[NAV trigger]]s granting close-out rights related to significant decreases in the [[net asset value]] of the fund.  
Brokers will usually also require customised “[[additional termination event|additional termination events]]” tailored to the idiosyncrasies of their clients. For example, they will require of [[hedge fund]]s the right to terminate:
*'''[[Key person]] events''': if named individual investment managers cease to be associated with the fund;  
*'''[[NAV trigger]]s''': if [[NAV trigger]]s granting close-out rights related to significant decreases in the [[net asset value]] of the fund.  


These customised events tend to be more controversial and more complicated: [[NAV trigger]]s may be set at different thresholds over different periods
These customised events tend to be more controversial, harder to articulate and more complicated: [[NAV trigger]]s may be set at different thresholds over different periods.


====Margin====
====Margin====
Master trading agreements also have less invasive means of mitigating
Master trading agreements also have less invasive means of mitigating

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