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====Paragraph 2(a) Covenant to Perform==== | ====Paragraph 2(a): Covenant to Perform==== | ||
What is the point of the “covenant to perform”? Unless there is a third-party security trustee involved — [[Covenant to pay - Repackaging Provision|common in asset-backed securities]], for example — who is not a direct benefit of the covenant to perform then you already have a covenant in the ISDA itself. After all, the whole contract is a mutual covenant to perform. The reasons are partly habitual, belts-and-braces sort of stuff, partly practical and partly the [[deep magic]] from which the idea of security sprang in the primordial beginnings of the [[common law]]. The practical one is that the {{csd}} is, of course, a contract executed as a deed — a “[[specialty]]” in the odd language of Section 8 of the [[Limitation Act 1980]] — thereby earning you a 12-year limitation period, quite an upgrade on the 6-year period you get under the ''non''-specialty {{isdama}}, being indebtedness incurred under a “[[simple contract]]”. | What is the point of the “covenant to perform”? Unless there is a third-party security trustee involved — [[Covenant to pay - Repackaging Provision|common in asset-backed securities]], for example — who is not a direct benefit of the covenant to perform then you already have a covenant in the ISDA itself. After all, the whole contract is a mutual covenant to perform. The reasons are partly habitual, belts-and-braces sort of stuff, partly practical and partly the [[deep magic]] from which the idea of security sprang in the primordial beginnings of the [[common law]]. The practical one is that the {{csd}} is, of course, a contract executed as a deed — a “[[specialty]]” in the odd language of Section 8 of the [[Limitation Act 1980]] — thereby earning you a 12-year limitation period, quite an upgrade on the 6-year period you get under the ''non''-specialty {{isdama}}, being indebtedness incurred under a “[[simple contract]]”. | ||
Now what exactly would you be doing to omit to file a claim under a failed credit support arrangement for 6 months, let alone six years, it is hard to say, so this may seem like a peripheral benefit for all but the truly disorganised — but seeing as you’re signing as a specialty, and the benefit is there for the taking, Casanova’s prerogative applies. Stick it in. No-one will argue about it. | Now what exactly would you be doing to omit to file a claim under a failed credit support arrangement for 6 months, let alone six years, it is hard to say, so this may seem like a peripheral benefit for all but the truly disorganised — but seeing as you’re signing as a specialty, and the benefit is there for the taking, Casanova’s prerogative applies. Stick it in. No-one will argue about it. | ||
====Paragraph 2(b): Security==== | |||
[[2(b) - IM CSD Provision|Some]] observations about schoolboy errors that, I am afraid to say, readers, rather validate the concern that drafting and even comprehension standards within {{icds}} are off their historical highs. We may find {{icds}} 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. | |||
====Paragraph 2(c) Restrictions on Dealings==== | But in the {{imcsd}}, 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]] {{imcsdprov|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 [[assignment by way of security|by way of security]]? | |||
====Paragraph 2(c): Restrictions on Dealings==== | |||
JC wouldn’t normally get excited about a clause as quotidian is this but it, brings uncommon joy to be the one to point out the references to “[[clearing system]]s”. Elsewhere in this {{imcsdprov|Deed}} — for example, in the definition of {{imcsdprov|Assigned Rights}}, we find [[the ’squad]] carelessly referring to “[[clearance system|clear''ance'' system]]s”. | JC wouldn’t normally get excited about a clause as quotidian is this but it, brings uncommon joy to be the one to point out the references to “[[clearing system]]s”. Elsewhere in this {{imcsdprov|Deed}} — for example, in the definition of {{imcsdprov|Assigned Rights}}, we find [[the ’squad]] carelessly referring to “[[clearance system|clear''ance'' system]]s”. | ||
In a document as tediously, fastidiously, ''anal-retentively''-drafted as this one is — the {{imcsd}} really sets a benchmark, even amongst [[ISDA]] documents — this will not do. | In a document as tediously, fastidiously, ''anal-retentively''-drafted as this one is — the {{imcsd}} really sets a benchmark, even amongst [[ISDA]] documents — this will not do. | ||