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Template:M intro isda qualities of a good ISDA (view source)

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Defaulting customers will be absent without official leave, responding to no communication channels at all. Bank chief executives won’t take each other’s calls. Prime Ministers will be ordering overseas embassies to max out their credit cards just to have cash on hand to meet the government’s obligations.<ref>This happened in New Zealand in 1981. [[Wage and price freeze|True story]]. </ref> Central bankers will be ordering the banks they regulate to lowball [[London Inter Bank Offered Rate|LIBOR]].<ref>Controversial, I know, but this seems increasingly likely to have been the case.</ref> It will be ''chaos''.
Defaulting customers will be absent without official leave, responding to no communication channels at all. Bank chief executives won’t take each other’s calls. Prime Ministers will be ordering overseas embassies to max out their credit cards just to have cash on hand to meet the government’s obligations.<ref>This happened in New Zealand in 1981. [[Wage and price freeze|True story]]. </ref> Central bankers will be ordering the banks they regulate to lowball [[London Inter Bank Offered Rate|LIBOR]].<ref>Controversial, I know, but this seems increasingly likely to have been the case.</ref> It will be ''chaos''.


We do not imagine that, when they crafted its close-out mechanics, the ’squad had in mind the wider general ''ambiance'' in which the ISDA’s s last-resort rights would be exercised. They ''can’t'' have. We imagine they pictured the close-out urge coming upon the responsible credit officer, in isolation, at a time of beatific placidity: that there would be time and space to consider and quietly contemplate what must be done, perhaps with a frisson of regret for the poor customer whom one is letting down.
When they crafted its close-out mechanics, [[the ’squad]] did not have in mind the wider general ''ambiance'' in which the ISDA’s last-resort rights would be exercised. They ''can’t'' have. They can only have pictured the close-out urge coming upon the responsible [[credit officer]], in isolation, at a time of beatific placidity: that there would be time and space to consider and quietly contemplate what must be done, perhaps with a frisson of regret for the poor customer whom one is letting down.


''It will not be like that.''  
''It will not be like that.''  


There will be multiple counterparty failures at once. All kinds of things will be stretching your attention, and your management’s. There will be allegations — unproven, unverifiable, and likely false ''but at the time you won’t know it'' — of fraud, of dastardly dealing, of internecine conflicts within the client, of side-conversations with your CEO who is allegedly related to the chief investment officer by marriage, of predatory competitors beating you to the close-out punch and eating your lunch. All of this is the fog of war.  
There will be multiple counterparty failures at once. All kinds of things will be stretching your attention, and your management’s. There will be allegations — unproven, unverifiable, and likely false ''but at the time you won’t know it'' — of fraud, of dastardly dealing, of internecine conflicts within the client, of side-conversations with [[The CEO wants this to happen|your CEO who]] is allegedly related to the chief investment officer by marriage, of predatory competitors beating you to the close-out punch and eating your lunch. Some of this may be true. Much will be nonsense. You will have no means of telling. All of this is the fog of war.  


Even among those who had them in the first place, patience and a sense of humour will be in short supply. People — many, ''many'' people — will want short, clipped answers to different questions they are all shouting at you at once — questions ''to which there are no short, clipped answers''. If you even understand the question, the last thing anyone wants to hear by way of answer is, “ahhh, it’s ''complicated''” or, God forbid, “the contract is not clear.”
Even among those who had them in the first place, patience and a sense of humour will be in short supply. People — many, ''many'' people — will want short, clipped answers to different questions they are all shouting at you at once — questions ''to which there are no short, clipped answers''. If you even understand the question, the last thing anyone wants to hear by way of answer is, “ahhh, it’s ''complicated''” or, God forbid, “the contract is not clear.”
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=== Consistency ===
=== Consistency ===
{{Drop|I|t helps with}} clarity if, in a scrape, you know what your ISDA will say where it matters. You can be sure of this if you control quality where it matters. (Where it doesn’t — and with all the will in the world there are open tracts of most ISDA Schedules which will never have practical impact on anything, you can afford to take a view.)
{{Drop|I|t helps with}} clarity if, in a scrape, you know what your ISDA will say where it matters without having to actually go and read it. This actually happened:
{{quote|
''SCENE: A COBRA committee meeting at a large investment bank in the teeth of the [[global financial crisis]]. ''<br>{{script|Head of Trading}}: I need to know our close-out rights against these fifteen Lehman entities.<br> {{script|General counsel}} ''(looking pleased with himself)'': We have a crack squad of our best lawyers on it. You will have an answer within forty-eight hours.<br>{{script|Head of Trading}}: Forty eight hours? I want it in forty eight ''seconds''.}} 


“This is all very well but how, JC, are we supposed to force a counterparty to take our credit terms? It is a competitive market! No-one in their right mind would do that! We must negotiate every time! And plus, we can’t stop our counterparties insisting on bespoke terms, you know: this is a client service business! We cannot dictate!”
At the point where you need your close-out rights, ''it is too late to start reading contracts''. Have you ever tried to read an ISDA Schedule in a hurry?  You might not need to ''if you control quality where it matters''.


Quite so: and to get you through the livelong day we commend [[serenity’s prayer]] to you.  
“This is all very well but how, JC, are we supposed to force a counterparty to take our credit terms? It is a competitive market! No-one in their right mind would do that! We must negotiate every time! And, plus, we can’t stop our counterparties from insisting on their own bespoke terms, you know: this is a client service business! We cannot dictate!”
 
Quite so: and to get you through the live-long day we commend [[serenity’s prayer]] to you.  


You cannot control everything, it is true. But there are some things you ''can'' control: the starting point for your own docs, for one thing — and some things certainly cannot be able to: the customer’s pet peeves.   
You cannot control everything, it is true. But there are some things you ''can'' control: the starting point for your own docs, for one thing — and some things certainly cannot be able to: the customer’s pet peeves.   


But pet peeves have the general quality of being correct: few people are peeved at a failure to pay clause.  
But pet peeves have the general quality of being ''correct'': few customers are “peeved” at the {{isdaprov|Failure to Pay}} or {{isdaprov|Bankruptcy}} events of default.  


If you configure your human system to constantly ''sand off'' rough edges when you encounter them then these pet peeves serve as a kind of carborundum.  
If you configure your human system to constantly ''sand off'' rough edges when you encounter them — see “[[jidoka]]” above — then these pet peeves can serve as a kind of carborundum.  


It is a curious fact that augmentations to a template — scar tissue from previous wounds —have a habit of sticking to your legal forms, whereas simplifications do not. This is a cultural matter. It is in your gift to change it. You just need to take hearts and minds with you.
It is a curious fact that augmentations to a template — scar tissue from previous wounds —have a habit of sticking to your legal forms, whereas simplifications do not. This is a cultural matter. It is in your gift to change it. You just need to take hearts and minds with you.  


If you start off with something you know to be offensive do not be surprised when they do not accept it.  
If you start with something you know to be offensive do not be surprised when they do not accept it.  


A useful rhetorical, seldom posed, is:  
A useful rhetorical, seldom posed, is:  
{{Quote|If someone presented this term to me, would ''I'' accept it?}}
{{Quote|If someone presented this term to me, would ''I'' accept it?}}


Rebase your documents to be acceptable to the person on the Clapham omnibus, at least ''in concept'', from the off. Legal advisors are already incentivised to seek changes as a means of demonstrating their [[legal value|value]]. Why start with a form with which any sane advisor would ''have'' to take issue?
Rebase your documents to be acceptable to the person on the [[Reasonable person|Clapham omnibus]], at least ''in concept'', from the off. Legal advisors are already incentivised to seek changes as a means of demonstrating their [[legal value|value]]. Why start with a form with which any sane advisor would ''have'' to take issue?


====“Platinum plating”====
====“Platinum plating”====
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