81,644
edits
Template:Csa transaction versus credit support document: Difference between revisions
Template:Csa transaction versus credit support document (view source)
Revision as of 15:02, 16 January 2020
, 16 January 2020→Profound onotological differences
Amwelladmin (talk | contribs) |
Amwelladmin (talk | contribs) |
||
| Line 1: | Line 1: | ||
===Profound onotological differences=== | ===Profound onotological differences=== | ||
Unlike a [[title transfer]] {{ukcsa}}, the {{nyvmcsa}} is ''not'' a Transaction under the {{isdama}}, but is in fact a {{isdaprov|Credit Support Document}}: a standalone [[collateral]] arrangement that stands aloof and apart from the {{isdama}} and all its little diabolical {{isdaprov|Transaction}}s, and the reason for ''that'' is — and, spoiler: it’s not a very good one — because while a {{ukcsa}}, by being a {{ttca}}, reverses the [[indebtedness]] claim outright, an {{nyvmcsa}} (and, for that matter, an English law Credit Support Deed) does not: it only provides a [[security interest]]. The [[in-the-money]] counterparty is still [[in-the-money]]. It is just ''secured'' for that [[exposure]]. The outright exposure between the parties does not change. | Unlike a [[title transfer]] {{ukcsa}}, the {{nyvmcsa}} is ''not'' a {{isdaprov|Transaction}} under the {{isdama}}, but is in fact a {{isdaprov|Credit Support Document}}: a standalone [[collateral]] arrangement that stands aloof and apart from the {{isdama}} and all its little diabolical {{isdaprov|Transaction}}s, and the reason for ''that'' is — and, spoiler: it’s not a very good one — because while a {{ukcsa}}, by being a {{ttca}}, reverses the [[indebtedness]] claim outright, an {{nyvmcsa}} (and, for that matter, an English law Credit Support Deed) does not: it only provides a [[security interest]]. The [[in-the-money]] counterparty is still [[in-the-money]]. It is just ''secured'' for that [[exposure]]. The outright exposure between the parties does not change. | ||
This is magical, bamboozling stuff — deep ISDA lore — and, at least where [[rehypothecation]] is allowed under Paragraph {{nyvmcsaprov|6(c)}} of a {{nyvmcsa}} — it pretty much always is — it serves no real purpose, because even though you ''say'' you are only pledging the collateral, in the the greasy light of commercial reality, from the moment the {{nyvmcsaprov|Secured Party}} [[rehypothecate]]s your pledged assets away into the market, dear {{nyvmcsaprov|Pledgor}} you ''have'' transferred your title outright. <ref> | This is magical, bamboozling stuff — deep ISDA lore — and, at least where [[rehypothecation]] is allowed under Paragraph {{nyvmcsaprov|6(c)}} of a {{nyvmcsa}} — it pretty much always is — it serves no real purpose, because even though you ''say'' you are only pledging the collateral, in the the greasy light of commercial reality, from the moment the {{nyvmcsaprov|Secured Party}} [[rehypothecate]]s your pledged assets away into the market, dear {{nyvmcsaprov|Pledgor}} you ''have'' transferred your title outright. <ref> | ||