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Proposed Changes to ISDA Section 2(a)(iii) and the "Flawed Asset" Approach

Bloomberg Law Reports - Derivatives Law
June 2011

One of the cornerstones of the ISDA Master Agreement is Section 2(a)(iii), which provides in relevant part that "Each obligation of each party under Section 2(a)(i) [that is, each obligation of that party to make a payment or delivery] is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing . . . ."

© 2011 Bloomberg Finance L.P. All rights reserved. Originally published by Bloomberg Finance L.P. in the Vol. 2, No. 17 edition of the Bloomberg Law
Reports—Derivatives Law. Reprinted with permission. Bloomberg Law Reports® is a registered trademark and service mark of Bloomberg Finance L.P.