Specified Transaction - ISDA Provision: Difference between revisions

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 The {{2002ma}} expands the basic definition of {{isdaprov|Specified Transaction}} to specifically include [[futures]] [[credit derivatives]], [[repo]], [[stock lending]], weather derivatives, [[NDF]]s, transactions executed under terms of business and other commodities or similar transactions that is presently or in future becomes common in the financial markets.
+====An odd cognitive dissonance====
+Note {{dust}} doesn't generally pick up contracts in the nature of [[borrowed money]] or [[indebtedness]], because these are picked up under the wider scope of the {{isdaprov|Cross Default}} provision which, of course, applies to indebtedness your counterparty owes to anyone, not just to you (though it does cover indebtedness owed to you). Still, there is weirdness: {{isdaprov|Cross Default}} contemplates a {{isdaprov|Threshold Amount}} before it can be triggered. {{isdaprov|DUST}} doesn't.  So this leads to an odd gap:
-Note {{dust}} doesn't generally pick up contracts in the nature of [[borrowed money]] or [[indebtedness]], because these are picked up under the wider scope of the {{isdaprov|Cross Default}} provision which, of course, applies to indebtedness owed to anyone, not just by your counterparty to you. Still, there is weirdness: {{isdaprov|Cross Default}} contemplates a {{isdaprov|Threshold Amount}} before it can be triggered. {{isdaprov|DUST}} doesn't.  So this leads to an odd gap:
+*A (sub Threshold Amount) default under {{isdaprov|Specified Indebtedness}} ''between the two contractual parties'' would not entitle the innocent party to close out;
+*A default under ''any other derivative transaction'' (i.e., any {{isdaprov|Specified Transaction}}) between them  ''would'' - even if the quantum of the default was smaller than the default on indebtedness. Which is kind of counterintuitive. If you were to define {{dust}} to include indebtedness, of course, you'd be covered.
-A (sub Threshold Amount) default under {{isdaprov|Specified Indebtedness}} ''between the two contractual parties'' would not entitle the innocent party to close out, but a default under any other derivative transaction between them (i.e., as dfefined in {{isdaprov|Specified Transaction}}) ''would'' - even if the value of the payment default was smaller than the default on borrowed money. Kind of counterintuitive. If you were to define {{dust}} to include indebtedness, you'd be covered.
 {{isdaanatomy}}
 *{{isdaprov|Default under Specified Transaction}}