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There are some famous examples. [[Clifford Chance]] famously created its own black hole trying [[Extraordinary rendition|to define what ''wasn’t'' a company]] in a Luxembourg [[netting opinion]] in 2021. There is a good argument that in the spiral disc shape of the [[2018 ISDA Credit Support Deed for Initial Margin]] {{icds}} created a single, galaxy-sized black hole, into which the entire financial system may have fallen. | There are some famous examples. [[Clifford Chance]] famously created its own black hole trying [[Extraordinary rendition|to define what ''wasn’t'' a company]] in a Luxembourg [[netting opinion]] in 2021. There is a good argument that in the spiral disc shape of the [[2018 ISDA Credit Support Deed for Initial Margin]] {{icds}} created a single, galaxy-sized black hole, into which the entire financial system may have fallen. | ||
But it is easy to see how great catastrophes have their roots in innocuous trifles. Now, trifles do not get more innocuous than | But it is easy to see how great catastrophes have their roots in innocuous trifles. Now, trifles do not get more innocuous than [[tri-party collateral arrangement]]s, so it is fun to see how fractal arguments can arise even in this kind of ''soufflé''. | ||
Now in truth, the risk that a [[custodian]] will suffer such | For example, it is not uncommon for a [[custodian]] to seek an [[indemnity]] for extraordinary costs it incurs HEY! WAKE UP! in holding its clients’ assets and carrying out its clients instructions with regards to those assets. | ||
Now in truth, the risk that a [[custodian]] will suffer ''any'' such “extraordinary costs” is low. After all, what would they be? If it does, those costs are likely to be small in the grander scheme of things<ref>At least, when your grand scheme of things trucks in the multiples of millions, the parties will sort them out quickly and on the strength of the commercial imperative, and without a backward glance to the legal contracts. This is just the [[Custodian]] going “look, I’m doing you a solid, you don’t pay me a lot for it, so it’s only fair if I get hit with some unexpected cost for looking after your assets, I can pass it on to you.” | |||
There will be predictable skirmishes predicated on the outrageous width of the indemnity, and the client-side legal eagle will engage some favourite tropes: good faith, commercially reasonable manner, absence of negligence, fraud and wilful default. All those kinds of things. This is the equivalent of zooming i | There will be predictable skirmishes predicated on the outrageous width of the indemnity, and the client-side legal eagle will engage some favourite tropes: good faith, commercially reasonable manner, absence of negligence, fraud and wilful default. All those kinds of things. This is the equivalent of zooming i | ||