Template:M summ 2016 CSA 3(c)

A counterparty who has posted one form of 2016 VM CSA and can ask the 2016 VM CSA to switch it for something else. The 2016 VM CSA doesn’t have to, but derivatives counterparties being the reasonable commercial fellows they are — and their operations teams being no-nonsense pragmatists they are — they will generally allow this as part of the normal ebb and flow of collateral operations. Probably less of a thing now 2016 VM CSAs tend to be cash only and base currency cash at that, but the possibility remains, and as, to our enduring regreet, we know, ISDA’s crack drafting squad™ is not usually one to let unexplored possibilities go undocumented.

Note here the 2016 VM CSA can ask for an exchange, but the 2016 VM CSA is not obliged to accept it. This is a fundamental provision of “title transfer”: once the 2016 VM CSA is delivered under a title-transfer 1995 CSA, the 2016 VM CSA owns it absolutely. It only has to return 2016 VM CSA. This is a special, legal ninja use of the word “equivalent”. It means “fungible”; exactly the same as ~; not “broadly similar to ~”.

This is important also from a pricing (and operational) perspective: otherwise the 2016 VM CSA would have a “worst-of” option and would be entitled to continually switch into the "cheapest to deliver" of the 2016 VM CSA. Needless to say, the increased collateral flows would also increase the operational burden.

2016 VM CSAs: Contrast this with 2016 VM CSA, where a 2016 VM CSA has the option to deliver the cheapest of the 2016 VM CSA specified in the 1995 CSA.

2016 VM CSAs: A 2016 VM CSA does have a (limited) option in terms of selecting the 2016 VM CSA should there be a requirement to return posted credit support: it can select the cheapest to deliver of all the 2016 VM CSA that has been posted to it which currently comprises its 2016 VM CSA.