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Funny old world we live in. | Funny old world we live in. | ||
===Payments satisfied other ways=== | |||
One from the [[tricks for young players]] department. | |||
Say you have some awkward client who insists on a right to meet a credit support payment some other way? For example, by terminating other [[in-the-money]] | |||
{{isdaprov|Transactions}}, in lieu of ponying up cold, hard, folding spondoolies. Does this convert a hardcore payment obligation into something more vapid, vague and fluffy? Something that the failure to effectively carry out doesn’t quite qualify as a {{isdaprov|Failure to Pay or Deliver}}? | |||
“Look, I know I didn’t meet my [[variation margin]], but, Sir, your honour, I didn’t have to actually ''pay'' it. I was allowed to terminate something else ''in lieu''. So while I ''could'' have sorted this all out with a payment — and I think we can all agree that might have been the most sensible thing to do — and I ''was'' obliged to sort this out ''somehow'', I wasn’t ''obliged'' to sort it out ''with a payment''. Sir. Your honour.” | |||
Why might this matter? Isn’t it an {{isdaprov|Event of Default}} either way? What difference does it make whether it was a {{isdaprov|Breach of Agreement}} or a {{isdaprov|Failure to Pay or Deliver}}? | |||
I can already see hands shooting up from the [[ISDA ninja]]s in the front row. And yes, my little ''tricoteuses'', you are right. ''[[Grace period]]s''. That is the difference. A {{isdaprov|Failure to Pay or Deliver}} has a grace period of ''one'' day.<ref>''Three'' if you are one of those antediluvian types on a {{1992ma}}.</ref> A {{isdaprov|Breach of Agreement}} has a ''thirty'' day grace period. Even the hyenas will have given up and gone home by then. | |||