2.1.4.70.6 Transfer of Affected Transactions - Optional

The parties should consider the insertion of an additional provision into Part 5 concerning the transfer of "Affected Transactions" on the occurrence of a Termination Event.

Section 6(b)(ii) permits the transfer of "Affected Transactions" if it will result in a Termination Event being avoided. Such a transfer could adversely affect a party's credit exposure to the other party by removing a transaction which was counterbalancing an opposite position. Although the last paragraph of Section 6(b)(ii) requires the other party to give its consent to a transfer, there is a fairly limited condition on when consent can be withheld. The recommended amendment below is designed to enable a party to withhold its consent if it considers that its credit exposure to the transferor would be adversely affected by the transfer.

"The following sentence is added at the end of the last paragraph of Section 6(b)(ii):

"However, consent may be withheld if the other party considers that its credit exposure to the transferor would be adversely affected by the transfer.""


Last Update Date 29 Jun 2011