Derivatives · glossary
Turning every ended trade and every unpaid sum into one net sum, owed one way. Here the Close-out Amount of €786,000, less Atlas's €300,000 of collateral, gave €486,000. It works because everything sits in one agreement. Clause 6.5 · Chapter 4 · Chapter 12
Explained in Chapter 4, One Agreement: the Master, the Schedule and the People Who Negotiate It, of Derivatives.
The words “would not otherwise enter into any Transaction” are written for a court. They show that each party traded only because everything was one contract, so no trade can be pulled out on its own. Bringing all the trades to one net sum when the relationship ends is called close-out netting. Banks hold a legal opinion for each country, confirming that it will survive an insolvency there.Read Chapter 4, One Agreement: the Master, the Schedule and the People Who Negotiate It →
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This term is part of one complete fictional deal, with every document attached and a test after every chapter. Open Derivatives → · All terms A–Z →