Termination Currency Equivalent - ISDA Provision

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2002 ISDA Master Agreement
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Definition of Termination Currency Equivalent in a Nutshell

Use at your own risk, campers!
Termination Currency Equivalent” means, for an amount denominated in any other currency, the Termination Currency amount needed to buy that other currency using the FX agent’s spot exchange rate at 11:00 a.m. (in its location) on the day one would customarily fix a rate to purchase that currency for value the relevant termination date. If there is an Innocent Party, it will select the FX agent in good faith. If not, the parties must agree the FX agent.

Full text of Definition of Termination Currency Equivalent

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.

Related agreements and comparisons

Related Agreements
Click here for the text of Section Termination Currency Equivalent in the 1992 ISDA
Click to compare this section in the 1992 ISDA and 2002 ISDA.

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Content and comparisons

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 ==>


General discussion

Here’s what the Encyclopaedia Galactica[1] has to say about Termination Currency Equivalent:

Under the 2002 ISDA, a payment on early termination will be made in the Termination Currency. The “Termination Currency” must be specified in Part 1(f) of the Schedule to the 2002 ISDA and, if not specified or the currency specified is not freely available, the fallback will be U.S. dollar for a 2002 Agreement governed by New York law, and the euro if a 2002 ISDA is governed by English law. The 1992 Agreement had a U.S. dollar fallback regardless of the governing law of the 1992 ISDA. In calculating amounts payable, any Close-out Amount or Unpaid Amount is converted to a “Termination Currency Equivalent” on the basis of an exchange rate determined in accordance with the 2002 ISDA by a foreign exchange agent.

See also

Template:M sa 2002 ISDA Termination Currency Equivalent



  1. AKA the offical User’s Guide to the 2002 ISDA Master Agreement.