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Template:Isda 2(a)(iii) summ: Difference between revisions
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This might rile and unnerve [[credit officer]]s — by nature an easily perturbed lot — but given our arguments below for what a train wreck the whole {{{{{1}}}|2(a)(iii)}} thing is, those of stabler personalities will consider this in the round a good thing. | This might rile and unnerve [[credit officer]]s — by nature an easily perturbed lot — but given our arguments below for what a train wreck the whole {{{{{1}}}|2(a)(iii)}} thing is, those of stabler personalities will consider this in the round a good thing. | ||
Nevertheless the [[JC]] has seen valiant efforts to insert {{{{{1}}}|Additional Termination Events}} to section {{{{{1}}}|2(a)(iii)}}, and — ''quel horreur'' — ''Potential'' {{{{{1}}}|Additional Termination Event}}s, a class of things that does not exist outside the laboratory, and must therefore be defined. All this for the joy of invoking a clause that doesn’t make any sense in the first place. | Nevertheless, the [[JC]] has seen valiant efforts to insert {{{{{1}}}|Additional Termination Events}} to section {{{{{1}}}|2(a)(iii)}}, and — ''quel horreur'' — ''Potential'' {{{{{1}}}|Additional Termination Event}}s, a class of things that does not exist outside the laboratory, and must therefore be defined. All this for the joy of invoking a clause that doesn’t make any sense in the first place. | ||
“Some things are better left unsaid,” said no [[ISDA ninja]] ever. | “Some things are better left unsaid,” said no [[ISDA ninja]] ever. | ||
===Developments between editions=== | |||
====“...a condition precedent for the purpose of this Section 2(a)(iii) ...”==== | |||
The {{2002ma}} trims back the third limb of Section 2(a)(iii) from “all other conditions precedent” to just those that specifically say they mean to be caught by Section {{isdaprov|2(a)(iii)}}. This a sensible restriction in scope as far as it goes (but JC would go further and remove Section 2(a)(iii) altogether). | |||
We have heard the argument advanced — apparently on the authority of that [[FT book about derivatives]] — that this restricted third limb somehow conditions the other conditions precedent in the clause (i.e., that there is no ongoing PEOD or EOD and that the Transaction has not already been terminated): | |||
{{quote| | |||
Section 2(a)(iii)(3) makes clear that if people want to stipulate any condition precedent other than the standard ones in Section 2(a)(iii)(1) and (2) they must clearly add the wording that the relevant condition will be “a condition precedent for the purposes of Section 2(a)(iii)”. ... Effectively this narrows the scope of the corresponding provision of the 1992 Agreement where no such statement was necessary.}} | |||
It plainly does not, and nor do we see how you could read the FT book as making that argument. The extreme looseness of {{{{{1}}}|2(a)(iii)}} imported by ''any'' notified breach of the agreement, however technical, being a Potential Event of Default, remains. | |||
====“No Early Termination Date ... has occurred”...==== | ====“No Early Termination Date ... has occurred”...==== | ||
New in the {{1992ma}} was the second condition precedent, that “...no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated”. | New in the {{1992ma}} was the second condition precedent, that “...no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated”. | ||
This is tidy-up material to bring ''triggered'' {{{{{1}}}|Termination Event}}s into scope. There is a period between notice of termination and when the {{{{{1}}}|Early Termination Date}} is actually designated to happen — and in a busy ISDA it could be a pretty long period — during which time the {{{{{1}}}|Transaction}} is still on foot and going, albeit headed inexorably at a brick wall. | This is tidy-up material to bring ''triggered'' {{{{{1}}}|Termination Event}}s into scope. There is a period between notice of termination and when the {{{{{1}}}|Early Termination Date}} is actually designated to happen — and in a busy ISDA it could be a pretty long period — during which time the {{{{{1}}}|Transaction}} is still on foot and going, albeit headed inexorably at a brick wall. | ||