Template:Csa Credit Support Obligations comp

Between US and English law

Here is a comparison between the 1994 NY CSA and the 1995 CSA. The differences are largely down to the security interest versus title transfer — you know Pledgor versus Transferor and so on.

Betweem OG and VM

The key difference between the {{{{{1}}}|OG}} CSAs and the 2016 VM versions: there is no {{{{{1}}}|Credit Support Amount}} concept in the 2016s, seeing as there is no initial margin to reference. (Right?) Instead, it just references the Counterparty’s {{{{{1}}}|Exposure}}.

Delivery Amount

Now the interesting thing here is the difference that pledged collateral under the New York law versions of the CSA makes over title-transferred collateral regime of the English law versions. You will see the difference in the NY law version’s {{{{{1}}}|Delivery Amount}}, which is the positive difference between Secured Party’s {{{{{1}}}|Exposure}} and the value of Posted Credit Support held by the Secured Party — easy, right? — and the equivalent provision in the English law versions which is the positive difference between the {{{{{1}}}|Transferee}}’s {{{{{1}}}|Exposure}} and the {{{{{1}}}|Credit Support}} adjusted to exclude any inflight but unsettled collateral movements.

The English law versions are a bit more leaden in how they describe things but these amount to the same thing: you don’t get any credit (support) for collateral until it has landed with the other party.

This creates some curious scenarios, as you will see.

Return Amount

The only differences here are the liberal, but all the same redundant, spraying of “(VM)” all over the shop in the 2016, a single reference to the Regular Settlement Day in place of the, er, regular Settlement Day and the fact that the balance is deducted from the Credit Support Balance in the 1995, but the Transferee’s Exposure in the 2016 (there not being a “Credit Support Amount” in the 2016), for reasons which are explored more fully below).