A totally generic element name doesn’t work too well though when you try
to build a legal framework around the FpML Schema. The
conditionPrecedentBond element is named very specifically so in supporting
legal documentation built around the FpML the legal provision for a
Condition Precedent can be tied back to a similarly named FpML element.
Alternatively we could have a generic bondReference element but would then
need another element to specify how the presence of that bondReference
should be interpreted, i.e. is it included to trigger a Condition
Precedent legal provision, to reference a bond as part of an asset swap
etc.
Guy
_____
From: Lamy, Pierre [mailto:pierre.lamy@xxxxxx]
Sent: Wednesday, June 08, 2005 7:49 PM
To: 'ird@xxxxxxxxxxxxxxxxxxxxxx'; astf@xxxxxxxxxxxxxxxxxxxx
Cc: Weir, John; Bouklieva, Milla; Burbano, Esteban; Fahy, Tom
Subject: RE: FpML-IRD40 RE: FpML-ASTF next meeting
Guy,
Considering this broader suggested usage, I would propose to call this
extension bondReference, instead of conditionPrecedentBond. What do you
think?
_____
From: Guy Gurden [mailto:guy.gurden@xxxxxxxxxxxxx]
Sent: Wednesday, June 08, 2005 5:28 PM
To: ird@xxxxxxxxxxxxxxxxxxxxxx; astf@xxxxxxxxxxxxxxxxxxxx
Cc: Weir, John; Bouklieva, Milla; Burbano, Esteban; Fahy, Tom
Subject: RE: FpML-IRD40 RE: FpML-ASTF next meeting
Just some further info for those that weren't involved in the original IRD
WG discussions surrounding addition of the
swap/additionalTerms/conditionPrecedentBond. This wasn't specifically
added with asset swap support in mind. It was added to allow support for
USD swaps executed with the US Government Agencies (e.g. Freddie Mac and
Fannie Mae). Many of their swap deals include an additional provision
legally referred to as a "Condition Precedent" of the following form
(illustrative only)
Other Provisions
Condition Precedent: The effectiveness of this Swap Transaction is
conditional upon closing of Fannie Mae's USD 50 Million Fixed Medium-Term
Notes, Series B, due August 27, 2012 (CUSIP #123456782).
The conditionPrecedentBond element is of type Bond and allows a reference
to the related bond to be included within the FpML swap representation.
For example:
</swap>
...
<additionalTerms>
<conditionPrecedentBond>
<instrumentId
instrumentIdScheme="http://www.fpml.org/spec/2002/instrument-id-CUSIP-1-0";
>123456782</instrumentId>
<maturity>2012-08-27</maturity>
</conditionPrecedentBond>
</additionalTerms>
</swap>
We've already implemented this extension at SwapsWire and found it to
serve its intended purpose well.
Regards
Guy
_____
From: Lamy, Pierre [mailto:pierre.lamy@xxxxxx]
Sent: Tuesday, June 07, 2005 8:45 PM
To: 'astf@xxxxxxxxxxxxxxxxxxxx'; 'ird@xxxxxxxxxxxxxxxxxxxxxx'
Cc: Weir, John; Bouklieva, Milla; Burbano, Esteban; Fahy, Tom
Subject: FpML-IRD40 RE: FpML-ASTF next meeting
As a follow-up from the initial discussion that we had a couple of months
back when reviewing the proposal developed by the IRD Working Group, and
in preparation of the further review that we have scheduled for Thursday,
here are my observations on this proposal (which I attach to this email):
1. I think that there is consensus that the asset swap product should
be based upon the ird schema.
2. As part of the ASTF discussions, we have identified the following
required extensions:
* The optional bond underlyer
* an element to specify whether an adjustment has been made to the
leg schedule that references the bond (isCustomizedPaymentSchedule in our
current internal representation here at Goldman Sachs)
* a flag to indicate whether the bond that is referenced is a
zero-coupon bond, in which case there is a one-off payment (excellent
suggestion from Jean Chouraki, at BNPP)
3. John Weir and I are of the opinion that positioning these features
through the ird schema presents two downsides:
* It weakens the schema, as each standard interest rate swap can
then have an associated bond;
* It makes more difficult the formal identification of the asset
swaps. Indeed, it would be inappropriate to conclude that an asset swap
is an ird object that has the bond extension, because a number of dealers
appear to be trading asset swaps without referencing explicitly the bond.
Also, the suggestion of identifying those through the
productId/productType does not seem necessarily appropriate, because FpML
does not provide any guideline (in terms of scheme, etc.) on how those
elements should be used.
Let me know what you think, and let's discuss this coming Thursday. I
hope that we will reach consensus, as this would be a good addition to the
set of FpML products.
_____
From: Karel Engelen [mailto:KEngelen@xxxxxxxx]
Sent: Saturday, June 04, 2005 3:21 PM
To: astf@xxxxxxxxxxxxxxxxxxxx
Subject: FpML-ASTF next meeting
All,
The next meeting will be on Thursday June 9 at 8:30 NY time. The meeting
will be together with the meeting of the IRD working group.
Attached is the original document with an update from our last meeting. A
document with the proposed changes to the Equity Swap structure will be
distributed beginning next week together with the analysis for the Asset
Swap.
Karel
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