Derivatives · glossary
What an insolvency office-holder can do with separate contracts: enforce those that favour the failed company and leave the rest as claims. Putting every trade into one agreement stops it, because the trades then net to one sum. Clause 1.3 · Chapter 4
Explained in Chapter 4, One Agreement: the Master, the Schedule and the People Who Negotiate It, of Derivatives.
The office-holder (the administrator or liquidator) may enforce the contracts that favour the company and leave the rest as claims, which is called cherry-picking. Some insolvency laws set mutual debts off, as English law does, but many do not. A bank with thousands of trades in many countries needs the same answer everywhere, so the market writes the answer into the contract…Read Chapter 4, One Agreement: the Master, the Schedule and the People Who Negotiate It →
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