82,891
edits
Default Under Specified Transaction - ISDA Provision: Difference between revisions
Default Under Specified Transaction - ISDA Provision (view source)
Revision as of 14:27, 1 November 2019
, 1 November 2019no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 4: | Line 4: | ||
This is like {{isdaprov|Cross Default}}, but for non “borrowing” style transactions - for example [[swap|swap agreements]] agreements and [[repo]]s, '''but only transactions between the two counterparties and their referenced {{isdaprov|Credit Support Provider}}s and {{isdaprov|Specified Entities}}'''. | This is like {{isdaprov|Cross Default}}, but for non “borrowing” style transactions - for example [[swap|swap agreements]] agreements and [[repo]]s, '''but only transactions between the two counterparties and their referenced {{isdaprov|Credit Support Provider}}s and {{isdaprov|Specified Entities}}'''. | ||
If a [[Counterparty]] (or — sigh — its {{isdaprov|Credit Support Provider}} or {{isdaprov|Specified Entity}}) experiences an {{isdaprov|Event of Default}} under a [[swap]] agreement (or other transaction falling within the definition of {{isdaprov|Specified Transaction}} | If a [[Counterparty]] (or — sigh — its {{isdaprov|Credit Support Provider}} or {{isdaprov|Specified Entity}}) experiences an {{isdaprov|Event of Default}} under a [[swap]] agreement (or other transaction falling within the definition of {{isdaprov|Specified Transaction}}<ref>This is typically wide, though it excludes [[borrowed money]] - but check the Agreement!</ref> with you, this will be an {{isdaprov|Event of Default}} under the {{isdama}}. | ||
====[[Acceleration]], not [[Default]]==== | ====[[Acceleration]], not [[Default]]==== | ||
{{tag|DUST}} is triggered by an ''[[acceleration]] following an'' [[event of default]] under the {{isdaprov|Specified Transaction}}, not upon the default itself<ref>Except where that happens on [[maturity]]: see drafting point below.</ref>. Since the {{isdaprov|Specified Transaction}} is between you and the other party to the {{isdama}}, there is no great loss — it is within your gift to accelerate the other contract — and to achieve [[set-off]] you would have to do so anyway. | {{tag|DUST}} is triggered by an ''[[acceleration]] following an'' [[event of default]] under the {{isdaprov|Specified Transaction}}, not upon the default itself<ref>Except where that happens on [[maturity]]: see drafting point below.</ref>. Since the {{isdaprov|Specified Transaction}} is between you and the other party to the {{isdama}}, there is no great loss — it is within your gift to accelerate the other contract — and to achieve [[set-off]] you would have to do so anyway. | ||