2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual™
Termination Currency Equivalent in a Nutshell™
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Termination Currency Equivalent in all its glory
“Termination Currency Equivalent
” means, in respect of any amount denominated in the Termination Currency
, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency
(the “Other Currency
”), the amount in the Termination Currency
determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date
, or, if the relevant Close-out Amount
is determined as of a later date, that later date, with the Termination Currency
at the rate equal to the spot exchange rate of the foreign exchange
agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency
at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date
or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e)
, be selected in good faith by that party and otherwise will be agreed by the parties.
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But for the edition-appropriate references to “Loss and Market Quotation (as the case may be)” for the 1992 ISDA, and Close-out Amount (for the 2002 ISDA, these definitions are identical.
A fabulous example of the English language getting the better of a committee of its own seasoned professional users, ISDA’s remarkable “Termination Currency Equivalent” definition erodes the fabric in which the basic assumptions of people who share a common language are woven.
It convolutes, to the point of incomprehensibility, an idea well enough described by its own name. Who would labour under a serious doubt about this expression:
- “one party must pay the other the amount in its termination currency equivalent”?
Failing that, how about this:
- “one party must pay the other an equivalent amount in the termination currency”?
The idea of an amount in one currency of an amount expressed in another really oughtn’t to be that hard to master, but to see how hard someone with profound ontological uncertainty can make it, have a gander at this ==>
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- The JC’s famous Nutshell™ summary of this clause
- The Encyclopaedia Galactica’s entry on “Termination Currency Equivalent”