Disputed Calculations or Valuations - CSA Provision: Difference between revisions

In its {{2016csa}} ISDA not only passed up the opportunity to make this unused-in-practice language simpler, but [[bloody-minded]]ly made it worse, by providing anally-retentive alternatives for {{2002isda}} and {{1992isda}} close-out methodologies. Which is just spectacular.

The {{isdaprov|Transaction}} {{isdaprov|Exposure}} has — potentially — a different complexion. While some asset classes ([[FX]], [[synthetic equity]]) are pretty liquid and observable and, in the same way, there is not much to argue about, others are not. The less liquid a transaction is (a tranched [[CDO]] cubed anyone?), the more likely the broker is to refuse any dispute rights when carrying out its {{isdaprov|Calculation Agent}} function under the {{tag|ISDA}}. The logic runs like this:

This attitude is less common these days that swap trading is an unglamorous utility in a trading division which is only really there to support your wealth management offering, of course. And really, where you do see it you have a bigger problem, which is you are entrusting your cash to some whizzkid who has sold you a pup. If it is so complex only this guy’s excel spreadsheet can possibly understand it it is like --- did he show you any [[backtesting]] to get you across the line?

*It depends on the better angels of a {{isdaprov|Reference Market-maker}}’s nature — neigh, those of ''four'' of the blighters — in providing [[firm quotation]]s to be dissected, arithmetically averaged and arranged for the delight of all. But a moment’s reflection should tell you that {{isdaprov|Reference Market-maker}}s don’t ''have'' a better nature. They are certain not to provide a quote, which brings them no benefit (they can’t get a trade out of it) and saddles them with risk — albeit only the [[Chicken Licken]] sort of risk that [[Mediocre lawyer|assiduous attorneys]] like to busy themselves, namely the fear that one’s well-meaning [[bad faith]]<ref>I ''know'' this is a contradiction in terms.</ref> or [[negligence]] has somehow caused compensatable harm to the interests of another market participant<ref>The best defence to such an action, if you were wondering, is not to act in bad faith and to be competent in what you do. But that’s as may be: [[Chicken Licken]] is really only the excuse one wheels out for not wasting time doing something for which you get no benefit.</ref>.

Of course, none of these mitigants gives much scope for legal intercession, so a [[Mediocre lawyer|good lawyer]] tends to cast aspersions on them.