Template:M summ 2018 CSD 2(b)

Some observations about schoolboy errors that, I am afraid to say, readers, rather validate the concern that drafting and even comprehension standards within ISDA’s crack drafting squad™ are off their historical highs. We may find ISDA’s crack drafting squad™ to be haughty, fastidious and pedantic — not, traditionally, seen as shortcomings even if they make the day-to-day experience in the trenches that much more like the Somme — but, generally, the Squad’s legal acumen as been beyond reproach: standing waist-deep in mud for months on end is good for a young negotiator, as long as it is in the service of justified probity.

But in the 2018 English law IM CSD, we see the standard slipping. This clause is a good example:

“(present or future)”: Tossed out, no doubt, as a universal redundant catch-all, it doesn’t quite work in a security charging clause. You can’t, actually, grant a fixed charge over something you haven’t yet delivered into the account you are charging, you can’t identify, and which you aren’t yet — by the very theory of the game — even obliged to deliver into that account. There’s an ontological problem here. It goes deep. For how are you supposed to identify with any certainty what your future Posted Credit Support (IM) will be, before it has been calculated, before it is due, before you’ve posted it, at all, let alone with enough certainty for a fixed charge to attach to it, we can only wonder.

And is the assignment of these rights really absolute, or by way of security?