Template:M summ 2002 ISDA Specified Indebtedness: Difference between revisions

From The Jolly Contrarian
Jump to navigation Jump to search
No edit summary
(Replaced content with "{{Specified indebtedness capsule|isdaprov}}")
Tag: Replaced
Line 1: Line 1:
A simple and innocuous enough provision. Almost redundant — why go to the trouble of defining [[borrowed money]] as another term? (Answer: because some firms, in their wisdom, will wish to change the definition of [[borrowed money]] to include [[derivatives]], other trading exposures, or even any payment obligations of any kind, and for those people, {{isdaprov|Specified Indebtedness}} is a (somewhat) less loaded term.)<ref>By the way, the [[JC]]’s personal view is that one should ''not'' widen the definition beyond the normal conception of “[[borrowed money]]”, and if one is a [[Bank/Credit Institution|bank]], may wish to ''narrow'' it, to exclude [[Deposit|deposits]]. See the article on ISDA’s {{isdaprov|Cross Default}} {{gmslaprov|Event of Default}} for more information.</ref>.
{{Specified indebtedness capsule|isdaprov}}
 
In any case, what should one make of “[[borrowed money]]”? Could it include [[repo]] and [[stock loan]] obligations? Amounts owed to trade creditors? (In each case no, according to Simon Firth - see [[borrowed money|here]])
 
What of a failure to pay [[initial margin]]? Technicallty this is not the IM payer’s indebtedness — indeed when paid, it is the IM receiver’s indebtedness to the IM payer — so while it certainly comprises a failure to pay when due, the value of the {{isdaprov|Specified Indebtedness}} that failure contributes to the {{isdaprov|Threshold Amount}} might be nil, or even ''negative''.
 
See also the clumsier (but materially similar) definition of “{{efetprov|Specified Indebtedness}}” in the {{efetma}}.

Revision as of 19:00, 19 March 2020

Specified Indebtedness is a simple and innocuous enough provision. Almost redundant, you’d think — why go to the trouble of defining “borrowed money” as another term? (Answer: because many firms, in their wisdom, will wish to change the definition in the Schedule to include derivatives, other trading exposures, things owed to their affiliates, or even any payment obligations of any kind, and for those people, “Specified Indebtedness” is a (somewhat) less loaded term.

Retrieved from "https://jollycontrarian.com/index.php?title=Template:M_summ_2002_ISDA_Specified_Indebtedness&oldid=41885"