Specified Transaction - ISDA Provision: Difference between revisions

Specified Transaction - ISDA Provision (view source)

Revision as of 12:46, 1 February 2016

143 bytes added , 1 February 2016

→‎Commentary

Amwelladmin

Bureaucrats, Interface administrators, Administrators

82,891

edits

@@ Line 5: / Line 5: @@
 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.
-Note it doesn't generally include contracts in the nature of [[borrowed money]] or indebtedness (these are generally picked up under {{isdaprov|Cross Default}} which is designed to catch them) but it because {{isdaprov|Cross Default}} contemplates a {{isdaprov|Threshold Amount}} and {{isdaprov|DUST}} doesn't, 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 unaffacted party to close out, but a default under any other derivative transaction  (as dfefined in {{isdaprov|Specified Transaction}}) would.  Kind of counterintuitive.
+A (sub Threshold Amount) default under {{isdaprov|Specified Indebtedness}} between the two contractual parties would not entitle the unaffacted party to close out, but a default under any other derivative transaction  (as dfefined in {{isdaprov|Specified Transaction}}) would. Kind of counterintuitive.
 {{isdaanatomy}}
 *{{isdaprov|Default under Specified Transaction}}