December 12, 2020 by eklose
Contrary to the proposals of the German banking industry, the German banking authority considers that it is not permissible to distinguish between balance sheet positions (as receivables on the transfer of collateral) and off-balance sheet positions (the risk associated with derivatives transactions) is not permissible until the Basel rules on accounting compensation are in force. The credit support obligations of a party to the CSA framework contract are defined on the basis of the “mark-to-market” with respect to net risk under this agreement, subject to thresholds, minimum transfer amounts and add-ons. The CSA regularly assesses this net risk and assesses the security. If the risk exceeds the security held by a contracting party, other security must be transferred to that party. If the guarantee exceeds the exposure, the excess security must be returned to the counterparty (subject to thresholds, minimum transfer amounts and add-ons). The operation of the CSA in the event of termination of the contract With the termination of the contract, all rights to require the transfer or transfer of security covered by paragraphs 3 or 4 (paragraph 9, paragraph 1) are extinguished. Instead of returning the security, the insured party determines the guarantees. The amounts in question are considered unpaid amounts and are included in the net right to be determined in accordance with paragraph 9, paragraph 1, of the agreement. As a result, these amounts are deducted from all other outstanding amounts under the agreement. As a general rule, the CSA works in the same way as the 1995 International Swap Derivatives Association `Isda` Credit Support Annex (ISDA), the third part of the 2001 ISDA margin reserves and the margin maintenance provisions for retirement operations (e.g.
B the European master contract or the German framework contract for pension transactions). Cash security must be valued at face value plus interest accrued until the end of the contract (paragraph 9, paragraph 2). Securities security must be assessed on the proceeds of the sale of securities of the same type or, if the non-failing party chooses, the proceeds that the security taker may have received for a sale made immediately after the end of the contract in a manner that protects the interests of the supplier from protection (paragraph 9, paragraph 2). The CSA provides no further guidance as to how to determine the proceeds of a hypothetical sale. It is likely that such a provision can be adopted on the basis of rating courses or screens, provided it is made in good faith and in an economically rational manner. Under the master contract, the CSA is subject to German law. However, under the applicable conflict of law rules, the validity and applicability of security transfers under the CSA are affected by the laws of jurisdictions in which the warranty is located or is considered buried. Despite the harmonization efforts undertaken in many European countries following the transposition of the Directive on the finality of the colonies, some uncertainties and uncertainties remain in this regard.