This Credit Support Agreement template is designed for use under Irish law when parties need to establish a formal arrangement for managing credit risk through collateral. The document is typically used alongside master trading agreements or other financial contracts where parties wish to mitigate counterparty credit risk. It incorporates requirements from Irish financial regulations and relevant EU directives, particularly focusing on financial collateral arrangements. The agreement includes comprehensive provisions for calculating exposure, determining collateral requirements, managing transfers, and handling various market scenarios. It is essential for financial institutions, investment firms, and corporations engaging in trading relationships where credit exposure needs to be secured through collateral arrangements. The document should be customized based on the specific needs of the transaction, types of eligible collateral, and particular requirements of the parties involved.
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1. Parties: Identifies and defines the parties to the agreement, including the credit support provider and recipient
2. Background: Sets out the context of the agreement and references any master agreements or related transactions
3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles
4. Credit Support Obligations: Details the core obligations regarding posting and returning collateral
5. Delivery and Transfers: Specifies the mechanics and timing for transferring collateral
6. Calculations and Valuations: Establishes methods for calculating exposure and valuing collateral
7. Rights and Obligations: Sets out the ongoing rights and obligations of both parties regarding the collateral
8. Events of Default: Defines circumstances constituting default and consequential rights
9. Representations and Warranties: Contains standard and specific representations made by each party
10. Security Interest and Rights: Establishes the security interest in the collateral and related rights
11. Dispute Resolution: Procedures for resolving disputes regarding calculations or valuations
12. Governing Law and Jurisdiction: Specifies Irish law as governing law and jurisdiction provisions
1. Custody Arrangements: Include when a third-party custodian is involved in holding collateral
2. Eligible Credit Support: Include when specific types of collateral need to be defined beyond the standard categories
3. Interest and Distributions: Include when there are specific arrangements for handling income on collateral
4. Tax Provisions: Include when specific tax implications need to be addressed, particularly for cross-border arrangements
5. Regulatory Compliance: Include when specific regulatory requirements need to be addressed
6. Additional Termination Events: Include when specific termination scenarios need to be addressed beyond standard events of default
7. Credit Support Balance Adjustments: Include when specific adjustment mechanisms are required for the credit support balance
1. Schedule 1 - Eligible Credit Support: Detailed list of acceptable forms of collateral and applicable haircuts
2. Schedule 2 - Valuation Percentages: Specific percentages to be applied in valuing different types of collateral
3. Schedule 3 - Transfer Timing and Thresholds: Detailed timing requirements for transfers and applicable threshold amounts
4. Schedule 4 - Authorized Representatives: List of authorized persons who can act on behalf of each party
5. Schedule 5 - Notice Details: Contact information and acceptable methods for notices
6. Appendix A - Form of Transfer Notice: Standard form for requesting transfers of collateral
7. Appendix B - Custody Agreement: Form of agreement with custodian if applicable
8. Appendix C - Calculation Examples: Examples illustrating how key calculations should be performed
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