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Additional Termination Event - ISDA Provision: Difference between revisions
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Additional Termination Event - ISDA Provision (view source)
Revision as of 09:06, 3 August 2018
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{{isdaanat|5(b)(vi)}} | {{isdaanat|5(b)(vi)}} | ||
{{ISDAnumberingdiscrepancy}} | {{ISDAnumberingdiscrepancy}} | ||
[[ATE]]s are likely to be the most haggled-over part of your {{isdama}}. | |||
These are the ''other'' termination events your [[Credit officer|Credit department]] has dreamt up for this specific counterparty, that didn’t occur to the framers of the {{isdama}} — or, at any rate, weren’t sufficiently universal to warrant being included in the {{isdama}} for all. While the standard {{isdaprov|Termination Events}} tend to be “non-fault” events which justify termination of the relationship on economic grounds, but not on terms necessarily punitive to the {{isdaprov|Affected Party}}, Additional Termination Events are more “credity”, more susceptible of moral outrage, and as such more closely resemble {{isdaprov|Events of Default}} than {{isdaprov|Termination Events}}. | |||
===Examples=== | |||
Common ones include: | |||
*[[NAV trigger|NAV triggers]] (for [[Hedge fund|hedge funds]]) | *[[NAV trigger|NAV triggers]] (for [[Hedge fund|hedge funds]]) | ||
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*Parent divestment (where counterparty is a financing subsidiary) | *Parent divestment (where counterparty is a financing subsidiary) | ||
=== | |||
There is a school of thought that this serves the interests of the [[Negotiator|Ancient Guild of Contract Negotiators]] and the [[Credit officer|Worshipful Company of Credit Officers]] more than it does the shareholders of the institutions for whom these people ply their trade, for in these days of [[Threshold - CSA Provision|zero-threshold]] [[CSA|CSAs]], the real credit protections in the ISDA are the standard {{isdaprov|Events of Default}} (especially {{isdaprov|Failure to Pay or Deliver}} and {{isdaprov|Bankruptcy}}). It’s a fair bet no-one in the organisation will have kept a record of how often you pulled NAV trigger. It may well be never. “Ahh”, your [[credit officer]] will say, “but it gets the counterparty to the negotiating table”. | |||
Hmmm. | |||
==={{t|Trick for young players}}=== | ==={{t|Trick for young players}}=== | ||