Template:M summ 2002 ISDA Unpaid Amounts: Difference between revisions

Template:M summ 2002 ISDA Unpaid Amounts (view source)

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-If you think of an ISDA transaction as comprising offsetting payment streams, these fall into one of three places:
+If you think of an ISDA {{isdaprov|Transaction}} as comprising offsetting payment streams, these payments fall into one of three [[ontological]] categories:
-*'''Been and gone''': Already paid: settled, gone, checked into the hereafter; on permanent location in that foreign country we call the past;
+*'''Been and gone''': Those that are already paid: settled, gone, checked into the hereafter; on permanent location in that foreign country we call the past — we care less about these; they are but a fossil record: they pose no risk, attract no capital and excite no prospects of revenue or compensation.
 *'''Yet to come''': Due to be paid, or delivered, at a specified date in the future. Perhaps fixed; perhaps yet to be determined, but conceptually still out there. It is, conventionally, by off setting the provisional present value of these future cashflows, that we value “the {{isdaprov|Transaction}}” — this is what we call its “[[Replacement Transaction - ISDA Provision|replacement cost]]”.
-*That weird inter-regnum of payments whose due date has passed, and who ''should have'' emigrated to that foreign country but, for whatever reason — either through inattention, inability, defiance, or the affordances of Section {{isdaprov|2(a)(iii)}} — they have not yet been made, so they need to be accounted for over and above the “replacement” value of the trade.
+*That weird inter-regnum of payments whose due date has passed, and which ''should have'' have been paid, and thus emigrated permanently to that foreign country but, for whatever reason — inattention, inability, defiance, or the affordances of Section {{isdaprov|2(a)(iii)}} — they have not yet been made, so they need to be worried about, accounted for and factored into things, over and above the “replacement” value of the trade.
-They are of interest in two cases: Default — clearly a significant possibility where a party is not meetings it oblighations as they fall due; and when taking credit support under the CSA, because they are of interest in calculating ones {{vmcsaprov|Exposure}}.
+{{isdaprov|Unpaid Amount}}s are of interest in two cases:
+* ''Default'' — obviously, they a significant possibility where a party is not meetings it obligations as they fall due; and
+* ''When taking credit support'' — because they must be remembered when calculating ones {{vmcsaprov|Exposure}}.
 You may want to know where {{isdaprov|Unpaid Amounts}} feature in the {{isdama}}. The answer: In {{isdaprov|Payments on Early Termination}}: Section {{isdaprov|6(e)(i)}} (for {{isdaprov|Events of Default}}) and {{isdaprov|6(e)(ii)}} (for {{isdaprov|Termination Events}}) and {{isdaprov|6(e)(iv)}} ({{isdaprov|Adjustment for Illegality or Force Majeure Event}}).