Calculation Agent: Difference between revisions

{{a|isda|{{image|Calculation Agent|png|Secret Co-Calculation Agent [[Georgie Esterman]], in a still from Otto {{buchstein}}’s under-appreciated 1952 [[Opco Boone]] noir'' The [[Co-calculation agent|Co-Calculation Agent]] Who Loved Me''}}}}{{d|Calculation Agent|/ˌkælkjʊˈleɪʃən ˈeɪʤənt/|n}}One who ''calculates'' things on behalf of contracting counterparties. In theory, under any kind of contract, but in practice, mainly in the ISDA extended fan-fiction universe, and in the documentation of bonds.  

To be endlessly compared and contrasted with a “[[determination agent]]”, who ''determines'' things on behalf of contracting counterparties. Do “calculation” and “determination” differ? Not as far as this correspondent can see. You tend to say, perversely, that a Calculation Agent ''determines'' things, and a Determination Agent ''calculates'' things, but largely because elegant prose has a horror of repetition. But will that stop [[legal eagle|over-enthusiastic members of the bar]] waxing lengthily about how they ''do'' differ? it will not.<ref>Pedants will note the different roles played by the {{eqderivprov|Calculation Agent}} and the {{eqderivprov|Determining Party}} in the {{eqdefs}}.</ref>

The ISDA Schedule has space to specify who the {{isdaprov|Calculation Agent}} should be but, curiously, gives scant hints as to what such an agent should do: the term isn’t otherwised defined — or even used — in either version of the {{isdama}}. The role comes in to its own under the {{csa}} and the various definitions booklets ISDA has published. The Calculation agent can differ from transaction to transaction, and while guileless negotiation teams may therefore spend a great deal of energy haggling fruitlessly about who should be the {{isdaprov|Calculation Agent}}, and what rights the other poor sap should have to challenge its determinations, in practice it will be the [[dealer]].

How strongly each feels about its right to ''query'' or dispute'' the Calculation Agent’s determinations will depend on the sort of products they’re expecting to trade: [[FX]] and simple [[equity derivative|equity derivatives]] have deep, liquid, observable markets, and as there’s little scope for picking a fight, a [[dealer]] {{isdaprov|Calculation Agent}} may not be bothered about ceding rights to dispute its calculations. Expect a different reaction should you seek to second-guess your [[dealer]]’s marks on exotic [[credit derivative|credit derivatives]], on the other hand. These rely enormously on the dealer’s internal models, pricing curves and other kinds of idiosyncratic financial [[bullshit|alchemy]] that are almost certainly unique to the [[dealer]] in question.