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Flawed asset: Difference between revisions
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===Master trading agreements=== | ===Master trading agreements=== | ||
*'''{{isdama}}''': You can find it all, in gruesome detail, in the article on Section {{isdaprov|2(a)(iii)}}. The ISDA provision has generated some case law, including [[Metavante]] and [[Firth Rixson]], which the truly insatiable amongst you may care to read. | *'''{{isdama}}''': You can find it all, in gruesome detail, in the article on Section {{isdaprov|2(a)(iii)}}. The ISDA provision has generated some case law, including [[Metavante]] and [[Firth Rixson]], which the truly insatiable amongst you may care to read. | ||
*'''{{gmsla}}''': As far as I can see there is no {{isdaprov|2(a)(iii)}} equivalent in the GMSLA. Nor would you expect one. It makes little | *'''{{gmsla}}''': As far as I can see there is no direct {{isdaprov|2(a)(iii)}} equivalent in the GMSLA, but Section 8.6, which allows you to suspend payment if you suspect your counterparty’s creditworthiness, is the closest, but it isn't a flawed asset clause. Nor would you expect one. It makes little sense in a master agreement for transactions that generally have zero or short tenors, and are inherently margined daily as a matter of course – i.e., there is no “uncollateralised, large, [[out-of-the-money]] exposures” an innocent stock lender would want to protect such a flawed asset provision. | ||
*'''{{gmsla}}''': Now here’s the funny thing. Even though the {{tag|GMRA}} is comparable to the {{tag|GMSLA}} in most meaningful ways, it '''does''' have a flawed asset provision. I don’t understand it, but that is true about much of the world of international finance. | *'''{{gmsla}}''': Now here’s the funny thing. Even though the {{tag|GMRA}} is comparable to the {{tag|GMSLA}} in most meaningful ways, it '''does''' have a flawed asset provision. I don’t understand it, but that is true about much of the world of international finance. | ||
{{2(a)(iii)}} | {{2(a)(iii)}} | ||