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Flawed asset: Difference between revisions
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{{anat|security}}You’ll be most likely wanting to see the discussion on this wonderfully baffling subject under Section {{isdaprov|2(a)(iii)}} of the {{isdama}}. But see also the [[extended liens]] case, which discusses “rare cases in which security rights fall wholly outside the recognised categories of [[lien]], [[pledge]], [[mortgage]] or [[charge]], and into a residual, purely [[contractual interest|contractual]], category sometimes categorised as turning the grantor’s property into a form of ‘[[flawed asset]]’.” | {{anat|security|}}You’ll be most likely wanting to see the discussion on this wonderfully baffling subject under Section {{isdaprov|2(a)(iii)}} of the {{isdama}}. But see also the [[extended liens]] case, which discusses “rare cases in which security rights fall wholly outside the recognised categories of [[lien]], [[pledge]], [[mortgage]] or [[charge]], and into a residual, purely [[contractual interest|contractual]], category sometimes categorised as turning the grantor’s property into a form of ‘[[flawed asset]]’.” | ||
More generally, following an [[event of default]], a [[flawed asset]] provision allows an innocent, but [[out-of-the-money]] party to a {{tag|derivative}} or {{tag|securities finance}} transaction to suspend performance of its obligations without terminating the transaction and thereby crystallising a [[mark-to-market]] loss. | More generally, following an [[event of default]], a [[flawed asset]] provision allows an innocent, but [[out-of-the-money]] party to a {{tag|derivative}} or {{tag|securities finance}} transaction to suspend performance of its obligations without terminating the transaction and thereby crystallising a [[mark-to-market]] loss. | ||
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*'''{{gmra}}''': 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. | *'''{{gmra}}''': 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)}} | ||
__NOTOC__ | __NOTOC__ | ||