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Template:M summ 2018 CSD 13(h): Difference between revisions
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===The alternatives=== | ===The alternatives=== | ||
====As-standard: a “designated Early Termination Date”==== | ====As-standard: a “designated Early Termination Date”==== | ||
The as-standard Secured Party Rights Event in the {{imcsd}} is the designation of an {{isdaprov|Early Termination Date}} in respect of all {{isdaprov|Transaction}}s following an {{isdaprov|Event of Default}} but — unless designated as an “{{imcsdprov|Access Condition}}” — not a ''normal'' {{isdaprov|Termination Event}} or an [[Additional Termination Event - ISDA Provision|''Additional'' Termination Event]]. For what it is worth, “Access Conditions” are a list of Termination Events and Additional Termination Events set out in Paragraph 13(e)(ii) for each of which one can opt — severally for each party — in your elections. What on earth {{ | The as-standard Secured Party Rights Event in the {{imcsd}} is the designation of an {{isdaprov|Early Termination Date}} in respect of all {{isdaprov|Transaction}}s following an {{isdaprov|Event of Default}} but — unless designated as an “{{imcsdprov|Access Condition}}” — not a ''normal'' {{isdaprov|Termination Event}} or an [[Additional Termination Event - ISDA Provision|''Additional'' Termination Event]]. For what it is worth, “Access Conditions” are a list of Termination Events and Additional Termination Events set out in Paragraph 13(e)(ii) for each of which one can opt — severally for each party — in your elections. What on earth {{icds}} managed to achieve with such pointless, fine-grained optionality (other than a sumptuous lifestyle for the hoardes of [[legal eagle]]s who will feast on client negotiations as a result) it is hard to say. | ||
In any case, just as a piece of design this is cruddy: ''any'' event leading to the early termination of all outstanding {{isdaprov|Transaction}}s, should count as a {{imcsdprov|Secured Party Rights Event}}, since at that point you are off risk, right? And before you complain that this is too wide, since there may still be amounts undetermined, or not as yet due under those {{imcsdprov|Transaction}}s, well, yes: that is exactly why the {{isdaprov|Early Termination Date}} is the wrong trigger point in the first place. | In any case, just as a piece of design this is cruddy: ''any'' event leading to the early termination of all outstanding {{isdaprov|Transaction}}s, should count as a {{imcsdprov|Secured Party Rights Event}}, since at that point you are off risk, right? And before you complain that this is too wide, since there may still be amounts undetermined, or not as yet due under those {{imcsdprov|Transaction}}s, well, yes: that is exactly why the {{isdaprov|Early Termination Date}} is the wrong trigger point in the first place. | ||
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(Quick drafting point: this means that a party fails to pay its {{isdaprov|Early Termination Amount}}, not that there is an {{isdaprov|Early Termination Amount}} determined following a {{isdaprov|Failure to Pay of Deliver}} {{isdaprov|Event of Default}}). That being the case, this is — well, if it covered all {{isdaprov|Termination Events}}, would be — the obvious best choice: it means, beyond any doubt the counterparty really has failed, it really did owe something, and it really did fail to pay it. | (Quick drafting point: this means that a party fails to pay its {{isdaprov|Early Termination Amount}}, not that there is an {{isdaprov|Early Termination Amount}} determined following a {{isdaprov|Failure to Pay of Deliver}} {{isdaprov|Event of Default}}). That being the case, this is — well, if it covered all {{isdaprov|Termination Events}}, would be — the obvious best choice: it means, beyond any doubt the counterparty really has failed, it really did owe something, and it really did fail to pay it. | ||
''Now'' you have all the justification you need to wade in and repossess your counterparty’s initial margin. Only, oddly | ''Now'' you have all the justification you need to wade in and repossess your counterparty’s initial margin. Only, oddly — infuriatingly — it doesn’t capture finally determined {{isdaprov|Early Termination Amount}}s that were caused by ''non''-{{isdaprov|Events of Default}} (the so-called “{{imcsdprov|Access Condition}}s”). Why, since at this point you have failed to pay the amount, and? Search me, readers. | ||
====Failing | ====Failing that: “{{imcsdprov|Control Agreement Secured Party Rights Event}}s”==== | ||
If you have chosen to designate in your Control Agreement what the Secured Party’s rights to possess collateral are, then that applies, and overrides any of the disastrous trainwreck we have just picked through above. | |||
===Cutting through the nonsense=== | ===Cutting through the nonsense=== | ||