-46-
credit event. The 1992 ISDA form agreement also provided that
the parties to a swap governed by that agreement could specify
any other event as a termination event in the schedule or
confirmation.22
The ISDA form agreements generally prohibited each party
thereto from selling or transferring its swap position to a third
party without the consent of the counterparty. The swap
contract, however, could be transferred to another in the case of
an amalgamation, consolidation, merger, or transfer of assets. A
nondefaulting party also could transfer any payment owed to it by
a defaulting party. The ISDA form agreements also permitted one
counterparty to transfer its swap agreement to one of its
branches or to an affiliate in order to avoid a termination
event. In that case, the other counterparty could not withhold
its consent to the transfer if its existing policies would permit
it to enter into transactions with the transferee on the terms
proposed.
The ISDA form agreements provided that where there was an
early termination due to the default of one party, the payment
would be ascertained by reference to quotations from leading
22 Notwithstanding the terms of a particular swap, a party
thereto could synthetically terminate any swap by entering into
an offsetting or mirror swap; i.e., a new swap with terms
identical to those in the remainder of an existing swap, but with
the payments reversed. The parties also could mutually agree to
terminate a swap with one party paying the other in a buyout.
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