Template:Credit support annex as a credit support document: Difference between revisions

===The {{csa}} is ''not'' a {{{{{1}}}|Credit Support Document}}...===

Among the countless good examples of just how contrived, over-engineered, and fiddly ''for the sake of being fiddly'' the ISDA canon is, there is none better than the fact that a New York law [[Credit Support Annex]] ''is'' a {{{{{1}}}|Credit Support Document}}, while the English law equivalent is not. If that were not silly enough, according to User’s Guide best practice one should not designate the counterparties themselves as {{{{{1}}}|Credit Support Provider}}s to ''either'', though it unclear which portion of the sky would fall in if one did.

A {{tag|CSA}}<ref>and its VM update, the {{vmcsa}}.</ref> is '''not''' a {{{{{1}}}|Credit Support Document}}, and you should not list it as one in {{{{{1}}}|Part 4}} of the {{{{{1}}}|Schedule}}, however satisfying it might be to do so. I mean it sounds like one, right? But no: the counterparty cannot be its own {{{{{1}}}|Credit Support Provider}}. The {{csa}} is, rather, a {{{{{1}}}|Transaction}} under the {{isdama}}. This is rather important to the whole issue of [[close-out netting]]. Deep [[ISDA lore]].

 

But the {{nycsa}} ''is'' a {{{{{1}}}|Credit Support Document}}: because it is a {{sfca}} arrangement and not a {{ttca}}, transfer of credit support under a {{nycsa}}<ref>and its VM update, the {{nyvmcsa}}.</ref> does not change the net liabilities between the parties, the {{nycsa}} (and its regulatory VM successor, the {{nyvmcsa}} is a {{{{{1}}}|Credit Support Document}} and not a transaction under the {{isdama}}. But, because the parties cannot be their own {{{{{1}}}|Credit Support Provider}}s, there are ''no'' Credit Support Providers under a New York law CSA. It is like some kind of self-animating poltergeist. Fun, huh?