What about the non-payment of an independent amount? From a technical point of view, this is not a debt payment and, if the im payer is up to date on the margins of variation, there may be no debt at all. Once the payer im has paid the necessary IM, the recipient of the IM will be indebted to the payer for the return of the initial margin – although it certainly includes non-payment at maturity, the value of the declared debt that contributes to the default threshold may be nil or even negative. This, your at-risk people will say, is the reason why one should extend the specified debt to all payment obligations, but that, for a variety of reasons that you can find here, is a big orange duck in this old counterparty opinion. Presentation This is an important reason to sign an agreement, because if the circumstances mentioned above are correct and your counterparty does not meet its debt obligations under credit contracts, banks that have signed isda master contracts with cross-application could terminate all transactions with your counterparty (provided the threshold is exceeded) when you could not do anything. This is because the merchants have been silent about the business; Cross Default was not used in the long form of confirmation. and you don`t have a signed agreement with your counterpart. (2) failure to make payments (again above a threshold) on the due date under debt contracts after termination or expiry of an additional period of time. Traders generally object to a cross-acceleration requirement because they limit their ability to negotiate simultaneously with their customer during any discussions about the work the customer might have with another lender. For example, a creditor could induce the client to mortgage additional collateral in exchange for the absence of an acceleration in debt. If the trader could not declare at the same time a cross-delay in the agreement, he would not be able to negotiate with the customer the same terms as the creditors of the other customer. A client should insist that a cross-failure occur only when the other debt is cross-accelerated, as opposed to the existence of a single delay.
Depending on the default language crossed in the agreement, a default may occur under another debt, whether or not the other creditor accelerates the declared debt. By requesting that default results in an acceleration of the underlying debt, a trader would not be able to terminate the contract until the other creditor has actually accelerated the declared debt.