Template:M summ 2018 CSD Other CSA

In the 2018 English law IM CSD, the Other CSA concept weighs in to handle the complex job of teasing apart what is real regulatory initial margin and what is merely stuff your dealer wants you to pony up for a rainy day, regardless of whether regulators think you need to. That, in the old days, we used to call an Independent Amount, and that lineage is preserved in its modern label “Margin Amount (IA)”, to be contrasted with Margin Amount (IM) for the compulsory regulatory stuff.

Now it falls to me to note that “Other CSA” is a rather unfortunate term, for a bunch of quite subtle reasons but, thanks to some perfidious accidents of history, ISDA’s crack drafting squad™ was more or less obliged to call it this. As with so many of ISDA’s catastrophic drafting choices, we are where we are.

What you need to bear in mind here is that for your non-regulatory margining arrangement to count as an Other CSA and for ISDA’s crack drafting squad™’s careful engineering to kick in, you will need to specify it as an Other CSA in paragraph 13, unless it already is a Credit Support Annex under this ISDA Master Agreement — because in that case it is already a Transaction under the Agreement, see? (Don’t, by the way, forget that Credit Support Deeds aren’t part of the ISDA Master Agreement and do need to be specified as an Other CSA. Even though, strictly speaking they’re deeds and not annexes and — oh well, how sad, never mind.

If I were more entrepreneurial than I am, I would make a witty tea-towel up about this, like that one with the rules of cricket on it, so dads like mine could have it up in their home bars, next to the poster of the chimpanzee playing tennis and scratching his arse.

In any case, prime brokers: you need to designate the prime brokerage agreement as an Other CSA. Even though it isn’t a CSA.

Why did ISDA’s crack drafting squad™ include the throw-away comment about the Control Agreement, which isn’t itself a collateral arrangement at all, not being an Other CSA at the end, when it clearly isn’t and no-one said it was in the first place? Who knows? Who cares?

... Except that it would be fun to specifically designate a Control Agreement as a Credit Support Document just to see what happened. I mean why you would, I don’t know, other than just to set off the smoke alarms in your dealer’s legal department — but come to think of it, that’s reason enough. You have to make your fun where you can get it, friends.