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Specified Transaction - ISDA Provision: Difference between revisions
Specified Transaction - ISDA Provision (view source)
Revision as of 12:54, 1 February 2016
, 1 February 2016→An odd cognitive dissonance
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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 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: | ||
*A (sub Threshold Amount) default under {{isdaprov|Specified Indebtedness}} ''between the two contractual parties'' would not entitle the innocent party to close out; | *A (sub {{isdaprov|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 | *A default under ''any other {{isdaprov|Specified Transaction}}'' between them ''would'' ''''' even if a smaller quantum of default'''''. This is kind of counterintuitive. If you were to define {{dust}} to include indebtedness, of course, you'd be covered. | ||
{{isdaanatomy}} | {{isdaanatomy}} | ||
*{{isdaprov|Default under Specified Transaction}} | *{{isdaprov|Default under Specified Transaction}} | ||