German Isda Master Agreement
The BSA requires the parties to agree on a benchmark interest rate for the calculation of interest on the security issued. Currently, by far the most common reference rate is the Euro Overnight Index Average or the EONIA. In addition, EONIA is used for settlement under the German director`s contract for securities lending and the German director`s contract for repo operations, which are also published by the banking association. EONIA is also often mentioned by the parties to these master contracts in additional bespoke provisions. This is why the banking association has prepared and organised the publication of an endorsement for the transition from EONIA to the short-term interest rate in euros (additional agreement for the transition from EONIA to the STR – the “Template Agreement”). Although it seems complex at first glance, it takes a modular approach and can be tailored to the needs of the parties and their specific agreements by choosing specific options. Options that are not selected by checking the corresponding box simply do not apply. In addition, Section 4 of the model agreement provides for a replacement reserve for the SSTR as a substitute to meet the requirement of a case language. The model agreement is for the DRV (part A of the template agreement), the German director`s contract for the loan of securities (in part B) and the German director`s contract for re boarding operations (part C). For each of these parties, the parties may decide, among other things, whether an amended SRT applies or whether they wish to use the daily amount of the STR plus a one-time allowance. For all variants under the template agreement, tailored provisions and alternative agreements can be negotiated. Options other than the choice of the reference rate itself include provisions relating to the date of the change and the exclusion of specific provisions or agreements between the parties. The third and final part focuses on the provisions relating to the EONIA within the framework agreement itself, in particular all the tailored provisions agreed between the parties, since the main part of the framework agreement does not refer to EONIA.
The legal model for resolving/winding financial contracts in the event of insolvency remains conceptually unchanged. If the parties were agreed that the delivery of goods with a market price or stock exchange or financial transactions should take place on a fixed date or within a fixed period, and that this period or the end of the insolvency proceedings occurs after the insolvency proceedings have been opened, the benefit cannot be used. However, non-performance rights may continue to be invoked. The right to non-performance covers the difference between the agreed price and the date agreed by the parties, but no later than the fifth working day following the opening of the insolvency proceedings at the place of execution of a contract of the agreed duration. If the parties do not enter into such an agreement, the second business day following the opening of the insolvency proceedings is the date to be taken into account. The other party can only assert this claim as an insolvency creditor. The new law offers a more robust solution according to the general administrative act of the Bundesanstalt for Finanzdienstleistungsaufsicht, which was published on the same day as the decision of the Federal Court of Justice and which must offer an interim solution. It also offers new possibilities for structuring compensation agreements in framework contracts.