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Template:Csa title transfer vs pledge: Difference between revisions
Template:Csa title transfer vs pledge (view source)
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====Title transfer under a {{ukcsa}}==== | ====Title transfer under a {{ukcsa}}==== | ||
Under a “{{ttca}}” when a party provides collateral it transfers it to the other party outright and absolutely: it ''gives'' it, free of all reversionary interests, to the {{{{{1}}}prov|Transferee}}. | Under a “{{ttca}}” when a party provides collateral it transfers it to the other party outright and absolutely: it ''gives'' it, free of all reversionary interests, to the {{{{{1}}}prov|Transferee}}. | ||
*Securities delivered to {{{{{1}}}prov|Transferee}}become the {{{{{1}}}prov|Transferee}}’s property absolutely | *Securities delivered to {{{{{1}}}prov|Transferee}} become the {{{{{1}}}prov|Transferee}}’s property absolutely | ||
*{{{{{1}}}prov|Transferee}} does not hold them in custody for the {{{{{1}}}prov|Transferor}}; | *{{{{{1}}}prov|Transferee}} does not hold them in custody for the {{{{{1}}}prov|Transferor}}; | ||
*{{{{{1}}}prov|Transferee}} has only an obligation to redeliver an [[equivalent]] security. | *{{{{{1}}}prov|Transferee}} has only an obligation to redeliver an [[equivalent]] security. | ||
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===“{{isdaprov|Transaction}}” versus “{{isdaprov|Credit Support Document}}” complicated affair.=== | ===“{{isdaprov|Transaction}}” versus “{{isdaprov|Credit Support Document}}” complicated affair.=== | ||
''{{ukcsa}}s are {{isdaprov|Transaction}}s but are not {{isdaprov|Credit Support Document}}s. | You are going to love this. Strap yourselves in. Are you ready? | ||
''{{nycsa}}s are {{isdaprov|Credit Support Document}}s | *''{{ukcsa}}s are {{isdaprov|Transaction}}s but are not {{isdaprov|Credit Support Document}}s. | ||
*''{{nycsa}}s '''not''' {{isdaprov|Transaction}}s, and, explicitly, '''are''' {{isdaprov|Credit Support Document}}s'', though you should not (according to the user’s guide) describe the parties to one as “{{nycsaprov|Credit Support Provider}}s”. | |||
*''{{csd}}s (including the {{imcsd}}) are '''not''' {{isdaprov|Transaction}}s and, explicitly, '''are''' {{isdaprov|Credit Support Document}}s''. | |||
Because ownership transfers absolutely, the {{{{{1}}}prov|Transferee}} doesn’t have to do anything to enforce its collateral. It already owns it outright. Indeed, to the contrary, should the {{{{{1}}}prov|Exposure}} that the collateral supports disappear, the {{{{{1}}}prov|Transferor}}will be the creditor of the {{{{{1}}}prov|Transferee}}. It is as it it were a {{isdaprov|Transaction}} under the ISDA where the mark-to-market exposure had flipped around. Indeed, a {{ukcsa}} '''is''' a “{{isdaprov|Transaction}}” under the {{isdama}} — it is an integral part of the {{isdama}} itself, and it is the proverbial schoolboy error to label a {{ukcsa}} as a “{{isdaprov|Credit Support Document}}”. It is not a Credit Support Document. From the point of view of the ISDA architecture it is the {{isdaprov|Confirmation}} for a {{isdaprov|Transaction}}. | This means the Events of Default for failure to pay under an English law CSA — being a {{isdaprov|Transaction}}, a failure to pay under it is a Section {{vmcsaprov|5(a)(i)}} {{vmcsaprov|Failure to Pay or Deliver}} — are different from those applying to New York law CSAs and English law CSDs (being Credit Support Documents, a failure to pay under these is a Section {{isdaprov|5(a)(iii)}} {{isdaprov|Credit Support Default}}). | ||
Because ownership transfers absolutely, the {{{{{1}}}prov|Transferee}} doesn’t have to do anything to enforce its collateral. It already owns it outright. Indeed, to the contrary, should the {{{{{1}}}prov|Exposure}} that the collateral supports disappear, the {{{{{1}}}prov|Transferor}} will be the creditor of the {{{{{1}}}prov|Transferee}}. It is as it it were a {{isdaprov|Transaction}} under the ISDA where the mark-to-market exposure had flipped around. Indeed, a {{ukcsa}} '''is''' a “{{isdaprov|Transaction}}” under the {{isdama}} — it is an integral part of the {{isdama}} itself, and it is the proverbial schoolboy error to label a {{ukcsa}} as a “{{isdaprov|Credit Support Document}}”. It is not a Credit Support Document. From the point of view of the ISDA architecture it is the {{isdaprov|Confirmation}} for a {{isdaprov|Transaction}}. | |||
But the {{nycsa}}s are ''not'' {{isdaprov|Transaction}}s, for the same reason: title ''doesn’t'' change hands. They are old fashioned security arrangements. Therefore they '''are'' Credit Support Documents in the labyrinthine logic of {{icds}}. This all no doubt must have seen an excellently complex thing for the little gnomes in {{icds}}when they were devising the idea of the [[CSA]] back in the early nineties. Nowadays, it just seems silly. But here we are, folks. | But the {{nycsa}}s are ''not'' {{isdaprov|Transaction}}s, for the same reason: title ''doesn’t'' change hands. They are old fashioned security arrangements. Therefore they '''are'' Credit Support Documents in the labyrinthine logic of {{icds}}. This all no doubt must have seen an excellently complex thing for the little gnomes in {{icds}}when they were devising the idea of the [[CSA]] back in the early nineties. Nowadays, it just seems silly. But here we are, folks. | ||