82,891
edits
Template:M gen 2002 ISDA 6(f): Difference between revisions
Template:M gen 2002 ISDA 6(f) (view source)
Revision as of 10:05, 27 September 2021
, 27 September 2021no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| (2 intermediate revisions by the same user not shown) | |||
| Line 1: | Line 1: | ||
===Red letter day for {{icds}}=== | |||
Whatever else you might have to say about ISDA’s set off provision — and as this page demonstrates, there’s quite a bit to say — one thing that stands out is ''how appallingly drafted it is''. | |||
The expression, “in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred” will make your head spin, but it is meant to strike two contingencies: ''All'' {{isdaprov|Transactions}} are being terminated, and ''one'' Party is at fault. | |||
The [[’squad]]’s own pedantic approach to drafting, which separates {{isdaprov|Events of Default}} from {{isdaprov|Termination Event}}s, and labels the perpetrators differently (“{{isdaprov|Defaulting Party}}” for the former; “{{isdaprov|Affected Party}}” for the latter, is to blame here. | |||
In any case one would only impose Section {{isdaprov|6(f)}} set off where your counterparty has gone fully ''[[tetas arriba]]'' and you have terminated all {{isdaprov|Transactions}}. In any other cases you would effect set-offs by mutually-agreed-at-the-time payment netting, which does not require any pre-existing legal right. | |||
===Cross-[[affiliate]] [[set-off]]=== | ===Cross-[[affiliate]] [[set-off]]=== | ||
The {{2002ma}}’s {{isdaprov|Set-off}} provision refers to a “{{isdaprov|Payer}}” and “{{isdaprov|Payee}}”. Since either the “{{isdaprov|Payer}}” or the “{{isdaprov|Payee}}” could be the {{isdaprov|Innocent Party}}<ref>i.e., non-{{isdaprov|Defaulting Party}} or the non-{{isdaprov|Affected Party}}.</ref>, including {{isdaprov|Affiliates}} into the 2002 definition becomes problematic and cumbersome. | The {{2002ma}}’s {{isdaprov|Set-off}} provision refers to a “{{isdaprov|Payer}}” and “{{isdaprov|Payee}}”. Since either the “{{isdaprov|Payer}}” or the “{{isdaprov|Payee}}” could be the {{isdaprov|Innocent Party}}<ref>i.e., non-{{isdaprov|Defaulting Party}} or the non-{{isdaprov|Affected Party}}.</ref>, including {{isdaprov|Affiliates}} into the 2002 definition becomes problematic and cumbersome. | ||