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Tags: Replaced Manual revert |
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| ===Section 2(a)===
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| Section {{isdaprov|2}} contains the basic nuts and bolts of your obligations under the {{isdaprov|Transaction}}s you execute. Pay or deliver ''what'' you’ve promised to pay or deliver, ''when'' you’ve promised to pay it or deliver it, and all will be well.
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| And ''then'' there’s the mighty [[flawed asset]] provision of Section {{isdaprov|2(a)(iii)}}. This won’t trouble ISDA [[negotiator]]s on the way ''in''to a swap trading relationship — few enough people understand it sufficiently well to argue about it — but if, as it surely will, [[Omega|the great day of judgement]] should visit upon the financial markets again some time in the future, expect plenty of tasty argument, between highly-paid Queen’s Counsel who have spent exactly ''none'' of their careers considering derivative contracts, about what it means.
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| We have some thoughts on that topic, should you be interested, at Section {{isdaprov|2(a)(iii)}}.
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| ===Section 2(b)===
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| {{icds}} phoning it in, we are obliged to say, and not minded to make any better a job of it when given the opportunity to in 2002.
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| ===Section 2(c)===
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| Our [[Jolly contrarian|chief contrarian]] wonders what on earth the point of this section is, since [[settlement netting]] is a factual operational process for performing existing legal obligations, rather than any kind of variation of the parties’ rights and obligations. If you owe me ten pounds and I owe you ten pounds, and we agree to both keep our tenners, what cause of action arises? What loss is there? We have settled our existing obligations in different way.
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| To be sure, if I pay you your tenner and you ''don’t'' pay me mine, that’s a different story — but then there is no [[settlement netting]] at all. The only time one would wish to enforce [[settlement netting]] it must, ipso facto, have actually happened, so what do you think you’re going to court to enforce?
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| ===Section 2(d)===
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| Section {{isdaprov|2(d)}} does the following:
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| *'''Net obligation''': if a counterparty suffers withholding it generally doesn’t have to gross up – it just remits tax to the revenue and pays net.
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| *'''Refund obligation where tax subsequently levied''': if a counterparty pays gross and subsequently is levied the tax, the recipient must refund an equivalent amount to the tax.
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| *'''{{isdaprov|Indemnifiable Tax}}''': the one exception is “{{isdaprov|Indemnifiable Tax}}” - this is tax arises as a result of the payer’s own status vis-à-vis the withholding jurisdiction. In that case the payer has to gross up, courtesy of a magnificent [[quintuple negative]].
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| {{isdaprov|Stamp Tax}} reimbursement obligations are covered at {{isdaprov|4(e)}}, not here.
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