Template:Nyvmcsaprov 6(d)(ii)
Interest transfer, adjustments and reductions: the squad falls down a rabbit hole
“George, you can type this shit, but I can’t say it.”
- — Harrison Ford, to George Lucas, about the script of Star Wars
If you have got as far into the ghastly bowels of ISDA speak that you have been trying to parse the meaning of Paragraph 6(d)(ii)(A)(I) — just the numbering should tell you to stay well clear — then God’s speed to you. JC only got through it because he was multi-tasking while on an all-hands client money remediation legal workstream weekly stakeholder check in call, and frankly even ritualistic satanic torture would appeal compared to that. But what is it saying?
So:
You are holding Posted Collateral that pays some kind of income, in cash. Cash being cash, it is yours instantly: you can’t custody it.[1] So you have to “manufacture” a corresponding payment. This is a finicky legalistic point — true, but finicky. But okay. You are about to make an equivalent cash payment to the Pledgor (Para {{{{{1}}}|6(d)(ii)(A)}}) — but the Pledgor also owes you more Posted Collateral (Para {{{{{1}}}|6(d)(ii)(A)}}(I)) (maybe the Exposure has moved in your favour). What to do?