Fish or cut bait: Difference between revisions

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 [[File:Fish or cut bait.gif|450px|thumb|center|A [[fish or cut bait]] provision yesterday]]
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-“Use it or lose it”, to use an easier, rugby-playing vernacular.
+“Use it or lose it”, in the vernacular. To carry on the rugby {{t|metaphor}}, when you have a good maul going forward, but momentum stalls and it looks like someone might have their hands on your ball, you might call “[[fish or cut bait]]!!” to stop an untriggered [[termination event]] hovering indefinitely over you and freaking your out your investors.
-When you have a good maul going forward, but momentum stalls, and it looks like someone might have their hands on your ball, the referee might call [[fish or cut bait]] to stop your [[additional termination event]] hanging on indefinitely and freaking your client out.
+Let’s say you’ve had a wonky month  — Coronavirus, right? —and there’s been a market drawdown on your [[assets under management|AUM]] — so much so that you have blown through [[NAV Trigger]] you were forced into when you were a two-person start-up above a shoe-shop in Camden. (I know, right?) Suddenly, out of nowhere, your broker seems to have a gun to your head, but she doesn’t seem to have much better an idea than you do what to do about it. {{sex|She}} keeps muttering nervously and changing the subject whenever you mention it.
-So, for example, you would have to exercise your rights following a [[NAV trigger]] within, say, 30 days.
+Now you ''could'' ask for a [[NAV trigger]] ''waiver'',<ref>And you should: this will start a petulant war between the broker’s legal and credit teams about whose job it is to prepare and send it.</ref> but the moment you blow through an [[ATE]] never feels like the ''best'' time to crave your broker’s indulgence. It would be much better to sort this out upfront, from a position of (relative) strength when you are negotiating docs: the weather’s fair, the wind is filling your sail, and all is well in the world.
-Clients say, not unreasonably, “Look, I don’t want a Sword of Damocles hanging indefinitely over my head. If I am in the shtook, at least be prompt about deciding what to do about it. And look — if you have managed to survive for a month without closing me out, can’t we assume you can survive indefinitely that way? I don’t want you coming back nine months from now, just because you’ve had a bad day, and closing me out on account of this silly NAV trigger, do I?”
+In these favourable conditions you might ask for a “[[fish or cut bait]]” provision: this is to say, “all right, have your stupid [[NAV trigger]] but, when it happens, be prepared to put your money where your mouth is. You have a month: shoot, or put your gun away.”
-But a [[credit officer]]’s lot is not a happy one. She has wound up working in credit, for one thing. That can hardly have been the plan. Plus she is generally overworked, under-appreciated, under-resourced and generally beset by existential doubts — for that is in large part why she became a credit officer in the first place. She will say a [[fish or cut bait]] clause make her life harder: the cut-off time is inevitably arbitrary (true — but isn’t ''life'' generally arbitrary?), what counts as an {{isdaprov|ATE}} is often ambiguous (''was'' it an ATE? ''Did'' they exceed the {{isdaprov|Threshold Amount}}?) and in any weather it is hard to calculate (30 days from the actual event, or when you ''knew'' of the event, or when you ''ought reasonably to have known'' about it, and so on), and undoubtedly some bright spark will want to have a [[grace period]], or carve out [[securities financing]] settlements and, in any case, at the time one is invoked, the world will be off its axis, age-old institutions will be in ruins, the head of risk will be running around with his hair on fire, and the fog or war will be thick enough to contrive confusion, angst and resentment to delay any close-out decision for easily the three or four weeks necessary to run down the [[fish or cut bait]] period.
+Presented with this suggestion, your broker will say, “um —”. For, quietly, risk officers quite ''like'' the idea of a silent, festering, trigger they can pull at any later stage should something unmentionable happen and there isn’t a better alternative.
+But carry on. Say, “look, I don’t want a Sword of Damocles hanging indefinitely over my head. If I am in the shtook, at least be prompt about putting me out of my misery. And look — if I have made it this far without blowing up, can’t we assume I out of the woods?”
+But a [[credit officer]]’s lot is not a happy one: she has wound up working in credit, for one thing. That can hardly have been the plan. Plus, she is generally overworked, under-appreciated, under-resourced and, by natural disposition, beset by existential doubts — that is in large part why she became a credit officer in the first place. She will say a [[fish or cut bait]] clause makes her life ''harder'': the cut-off time is inevitably arbitrary (true — but isn’t ''life'' arbitrary?); what counts as an {{isdaprov|ATE}} is often ambiguous (''was'' it an [[ATE]]? ''Did'' they exceed the {{isdaprov|Threshold Amount}}?) and in any weather it is hard to calculate (is it 30 days from the actual event, or when you ''knew'' of the event, or when you ''ought reasonably to have known'' about it, and so on).
+Undoubtedly some bright spark will want a [[grace period]], or to carve out [[securities financing]] settlements — there is an infinitude of pedantries that can be strewn in a credit officer’s path — and, in any case, at the time one is invoked, the world will be off its axis, age-old institutions will be in ruins, the head of risk will be running around with his hair on fire, and the fog of war will be thick enough to contrive confusion, angst and resentment to delay any close-out decision for easily the three or four weeks necessary to run down the [[fish or cut bait]] period.
 And in any case, if ''you'' have committed an [[event of default]], you are hardly the one who should be calling shots about when and whether ''I'' [[Close out|close you out]], are you?