# Can a Determining Party Revise Its Close-Out Amount Calculation after Submission? ▴ Question

**Published:** 2025-08-01
**Categories:** Question

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## Concept

The question of whether a Determining Party can revise its [Close-Out Amount calculation](https://prime.greeks.live/question/how-does-market-illiquidity-affect-the-validity-of-a-close-out-amount-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) after submission is a query that probes the very foundation of contractual certainty in derivatives markets. From a systems architecture perspective, the submission of a [Close-Out Amount under](https://prime.greeks.live/question/can-a-determining-party-still-face-legal-challenges-over-its-close-out-amount-calculation-under-the-2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) an ISDA Master Agreement is not a preliminary estimate; it is the triggering of a specific, irreversible protocol. The delivery of the calculation statement under Section 6(d) of the agreement causes a debt obligation to arise. This function is designed for finality.

The system is architected to prevent a single party from unilaterally altering a crystallized financial obligation, as this would introduce an unacceptable level of uncertainty and potential for strategic manipulation into the close-out process. The protocol’s integrity hinges on the principle that once a calculation is formally submitted, it stands as the definitive claim, subject only to specific, high-threshold interventions.

The architecture of the [ISDA Master Agreement](https://prime.greeks.live/area/isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), particularly the 2002 version, establishes a framework where the [initial calculation](https://prime.greeks.live/question/how-does-the-choice-of-a-close-out-period-influence-the-overall-initial-margin-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is paramount. The system does not contain a function for unilateral withdrawal and resubmission of a close-out statement. This is a deliberate design choice. The stability of the over-the-counter derivatives market relies on predictable, rules-based procedures following a default or other termination event.

Allowing a [Determining Party](https://prime.greeks.live/area/determining-party/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to amend its figures at will would undermine the certainty that the ISDA framework is meant to provide. Instead, the agreement establishes a different pathway for addressing inaccuracies. If the submitted calculation contains a demonstrable error, the mechanism for correction is not a unilateral revision but a process of mutual agreement between the parties or, failing that, adjudication by a court. The court then acts as the ultimate arbiter, not of a revised calculation, but of what the [Close-Out Amount](https://prime.greeks.live/area/close-out-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) should have been from the outset.

> A submitted Close-Out Amount calculation under an ISDA Master Agreement crystallizes a debt obligation and cannot be unilaterally revised.

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## The Nature of the Calculation Statement

The statement detailing the Close-Out Amount serves as a formal declaration of losses or gains resulting from the [early termination](https://prime.greeks.live/area/early-termination/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of transactions. Under the [2002 ISDA Master Agreement](https://prime.greeks.live/area/2002-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), the Determining Party is tasked with calculating this amount. This calculation is the economic equivalent of the terminated transactions, aiming to place the non-defaulting party in the same financial position it would have occupied had the transactions run their full course. The delivery of this statement is a critical step that transitions the process from valuation to a formal payment obligation.

A court decision in the case of Lehman Brothers Special Financing Inc. v National Power Corporation clarified that the service of this statement gives rise to an obligation on the relevant party to pay the specified amount. This legal interpretation underscores the finality of the submission.

This structure is designed to promote diligence and precision in the initial calculation. The Determining Party, knowing that its initial submission carries significant weight and cannot be easily undone, is incentivized to perform a thorough and defensible calculation. The framework anticipates that disputes may arise, but it channels these disputes into a structured resolution process rather than allowing for an endless loop of revisions. This approach ensures that the close-out process moves forward efficiently while providing a backstop for genuine errors.

The submitted statement, even if flawed, becomes the basis for any subsequent legal or negotiated resolution. A revised statement submitted later may be considered by a court as evidence, but it does not supersede the original filing.

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## What Constitutes an Error in Calculation?

An error that might warrant a correction is typically a manifest mathematical or numerical mistake rather than a strategic recalculation based on a different methodology. For instance, an incorrect input in a valuation model or a simple arithmetic error in summing up different components of the close-out amount could be grounds for a correction. The key distinction is between an error in applying a chosen methodology and a change of the methodology itself. A party cannot, for example, initially calculate its loss based on the cost of a replacement transaction and then later decide to submit a revised calculation based on a different set of indicative quotes that produces a more favorable result.

The courts have established that the process for correcting such errors is not a unilateral do-over. The correction should be made by agreement between the parties or, if they cannot agree, by a court or tribunal. This judicial oversight ensures that any adjustment to the Close-Out Amount is justified and conforms to the standards set out in the ISDA [Master Agreement](https://prime.greeks.live/question/what-are-the-key-differences-between-a-prime-brokerage-agreement-and-an-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

The burden of proof lies with the party alleging the error to demonstrate that the original calculation was flawed and to provide a basis for the corrected amount. This high bar for revision reinforces the principle of finality and discourages parties from using the pretext of an “error” to improve their post-termination position.

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## Strategy

The strategic considerations surrounding the calculation and potential revision of a close-out amount are profoundly shaped by the specific version of the ISDA Master Agreement governing the transactions. The distinction between the 1992 and 2002 agreements is not merely semantic; it represents a fundamental shift in the standard of conduct required of the Determining Party. Understanding this evolution is critical for any institution involved in derivatives, as it dictates the strategic approach to both calculating the initial amount and handling any subsequent disputes. The primary strategic imperative is to construct a defensible initial calculation, as the pathways for revision are narrow and procedurally demanding.

The 2002 ISDA Master Agreement introduced the concept of the “Close-out Amount” and, with it, a more stringent, objective standard for its calculation. It requires the Determining Party to act in good faith and use “[commercially reasonable procedures](https://prime.greeks.live/area/commercially-reasonable-procedures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in order to produce a [commercially reasonable](https://prime.greeks.live/area/commercially-reasonable/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) result.” This language was a deliberate change from the 1992 agreement, designed to introduce greater objectivity into the process. The strategic implication is that the entire calculation process must be transparent, well-documented, and aligned with observable market practices.

A party’s internal models and procedures will be subject to external scrutiny against an objective benchmark of [commercial reasonableness](https://prime.greeks.live/area/commercial-reasonableness/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This contrasts with the standard under the 1992 agreement, which provides more flexibility to the Determining Party.

> The shift from the 1992 to the 2002 ISDA Master Agreement replaced a subjective “rationality” standard with an objective “commercial reasonableness” standard for close-out calculations.

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## Comparing the 1992 and 2002 ISDA Standards

The operational differences between the two main versions of the ISDA Master Agreement have significant strategic consequences. The 1992 agreement allows parties to choose between “Market Quotation” and “Loss” as the method for calculating the [termination payment](https://prime.greeks.live/area/termination-payment/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The “Loss” methodology, in particular, grants the Determining Party considerable discretion, requiring it to determine its losses “reasonably. in [good faith](https://prime.greeks.live/area/good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).” Courts have interpreted this as a “rationality” standard, meaning the calculation cannot be challenged unless it is arbitrary, perverse, or not in line with the terms of the agreement. The 2002 agreement dispenses with these options and consolidates them into the single “Close-out Amount” definition, which imposes the higher, objective standard of commercial reasonableness.

This strategic landscape is detailed in the table below:

| Feature | 1992 ISDA Master Agreement | 2002 ISDA Master Agreement |
| --- | --- | --- |
| Valuation Method | Choice between “Market Quotation” (requires obtaining quotes from reference market-makers) and “Loss” (a broader measure of losses and costs). | A single “Close-out Amount” method, which provides flexibility in the types of information used. |
| Calculation Standard | For “Loss,” the standard is that the Determining Party “reasonably determines in good faith.” This has been interpreted by courts as a standard of rationality. | The Determining Party must act “in good faith and use commercially reasonable procedures in order to produce a commercially reasonable result.” This is an objective standard. |
| Judicial Scrutiny | Courts are less likely to interfere with a calculation under the “Loss” standard, provided it is not irrational. | A court can and will assess whether the procedures used and the result achieved were commercially reasonable by objective market standards. |
| Strategic Implication | The Determining Party has more flexibility and discretion in its calculation methodology. | The Determining Party must be prepared to defend its methodology and result against objective criteria, requiring more rigorous documentation and process. |

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## What Is the Strategic Approach to the Initial Calculation?

Given the near impossibility of unilateral revision, the strategy must be front-loaded. The Determining Party must approach the initial calculation with the assumption that it will be its final submission. This requires a robust and documented process.

- **Documentation** ▴ Every step of the calculation process should be meticulously documented. This includes records of all [market data](https://prime.greeks.live/area/market-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) considered, quotes requested and received, internal models used, and the rationale for including or excluding certain information. 

- **Adherence to “Commercially Reasonable Procedures”** ▴ Under the [2002 ISDA](https://prime.greeks.live/area/2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), this is paramount. The definition of Close-out Amount provides a non-exhaustive list of what this may include, such as using third-party quotations for replacement transactions and other relevant market data. A sound strategy involves gathering a range of data points to support the final figure. Relying on a single source of information, especially if it is an outlier, increases the risk of a successful challenge. 

- **Consideration of Hedges** ▴ The Close-out Amount definition allows the Determining Party to consider the costs of terminating, liquidating, or re-establishing any hedges related to the terminated transactions. A comprehensive calculation will include a thorough analysis of these costs or gains, ensuring they are directly attributable to the terminated trades and are calculated in a commercially reasonable manner. 

- **Legal Review** ▴ Before submitting the [Section 6(d) statement](https://prime.greeks.live/area/section-6d-statement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), it is prudent to have the calculation and its supporting documentation reviewed by legal counsel. This can help identify potential weaknesses in the methodology and ensure that the calculation aligns with the contractual requirements and relevant case law. 

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## Execution

The execution of a close-out calculation and the management of any subsequent disputes are governed by a precise set of protocols within the ISDA Master Agreement. The process is designed to be methodical, ensuring that both parties understand their obligations and the steps involved. Once a termination event occurs, the execution phase begins with the Determining Party’s calculation of the Close-Out Amount and culminates in either a settled payment or a formal dispute resolution process.

The inability to unilaterally revise a submitted calculation means that the execution of the initial calculation is the most critical phase. Any misstep in this phase can lead to protracted and costly disputes.

The core of the execution process under the 2002 ISDA Master Agreement revolves around the concept of “commercial reasonableness.” This is not an abstract principle; it is an executable standard that must be demonstrated through concrete actions. The Determining Party must be able to show that its procedures for arriving at the Close-Out Amount were objective and consistent with prevailing market practices at the time of the calculation. This involves a systematic approach to gathering and analyzing market information. The definition of Close-Out Amount explicitly allows for the use of a variety of sources, including quotations from third parties, relevant market data, and information from internal sources, provided it is used in a commercially reasonable way.

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## Procedural Steps Following Calculation Submission

Once the Determining Party has finalized its calculation, a specific sequence of events is set in motion. This protocol is designed to ensure transparency and provide a clear path to payment or dispute.

- **Issuance of the Section 6(d) Statement** ▴ The Determining Party provides the other party with a statement showing the Close-Out Amount in reasonable detail. This statement formally establishes the amount claimed. 

- **Crystallization of the Debt** ▴ Upon effective delivery of the statement, a debt for the specified amount becomes due. For an Event of Default, payment is typically due on the day the notice is effective. For a Termination Event, it is usually due on the second business day after the notice is effective. 

- **Review by the Recipient** ▴ The other party reviews the calculation. This is the point at which any potential disputes are identified. The recipient may question the methodology, the data used, or the final amount. 

- **Initiation of Dispute** ▴ If the recipient disagrees with the calculation, it must formally notify the Determining Party of the dispute. The grounds for the dispute must be clearly articulated, focusing on why the calculation fails the “commercially reasonable” standard under the 2002 ISDA or the “rationality” standard under the 1992 ISDA. 

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## How Are Calculation Disputes Operationally Handled?

When a dispute arises over the Close-Out Amount, the ISDA framework does not permit the Determining Party to simply issue a new calculation. Instead, the parties enter a distinct phase of resolution. The operational handling of such a dispute follows a clear hierarchy.

| Resolution Stage | Description | Key Considerations |
| --- | --- | --- |
| Bilateral Negotiation | The first step is for the parties to attempt to resolve the dispute through direct negotiation. This may involve sharing more detailed information about how the calculation was made and identifying the specific points of disagreement. | Parties may agree to a corrected amount. This agreement would supersede the original statement. Documentation of any settlement is crucial. |
| Mediation | If direct negotiations fail, the parties may agree to non-binding mediation with a neutral third party to facilitate a resolution. | This is a voluntary step but can be an effective way to avoid the cost and time of litigation. |
| Litigation or Arbitration | If no agreement can be reached, the dispute is resolved through the mechanism specified in the ISDA Master Agreement, which is typically litigation in a specified jurisdiction or arbitration. | The court or tribunal will act as the ultimate arbiter. It will not simply choose between the two parties’ figures but will determine the correct Close-Out Amount based on an objective assessment of the evidence and the “commercially reasonable” standard. A revised calculation from the Determining Party may be submitted as evidence during this process. |

In a legal setting, the court’s role is to determine what the Close-Out Amount should have been, had it been calculated correctly in the first instance. The court will scrutinize the procedures employed by the Determining Party. For example, it will assess whether the market data used was relevant, whether the selection of any replacement transaction for valuation was appropriate, and whether any internal models were applied consistently and fairly.

The court’s decision effectively replaces the original calculation. This judicial backstop is the ultimate enforcement mechanism for the “commercially reasonable” standard, providing a powerful incentive for Determining Parties to get their calculations right the first time.

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## References

- 

- Contrarian, The Jolly. “Close-out Amount – ISDA Provision.” The Jolly Contrarian, 14 Aug. 2024.

- Fieldfisher LLP. “Standard ISDA documentation continues to throw up disputes.” Fieldfisher, 30 Mar. 2016.

- Herbert Smith Freehills LLP. “High Court clarifies calculation of Close-out amount under 2002 ISDA Master Agreement.” Herbert Smith Freehills, 22 Mar. 2018.

- Herbert Smith Freehills LLP. “High Court restricts re-calculation of termination amount and interprets Close-out Amount under ISDA Master Agreement.” Herbert Smith Freehills, 26 Mar. 2018.

- Mark, Terence, and Francis Edwards. “How to handle derivatives close-out disputes.” The Law Society Gazette, 22 Nov. 2021.

- Walker Morris. “ISDA Master Agreements and the calculation of close-out payments.” Walker Morris, 19 Apr. 2018.

- International Capital Market Group. “Derivatives Laws and Regulations Close-out Under the 1992 and 2002 ISDA Master Agreements 2025.” ICLG.com, 17 June 2025.

- Global Capital. “The 2002 ISDA Master Agreement Made Simple.” Global Capital, 6 Jan. 2003.

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## Reflection

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## Calibrating Your Internal Systems

The inability to unilaterally revise a Close-Out Amount calculation is a foundational principle that ensures stability and predictability in the derivatives market. It transforms the calculation from a mere administrative task into a critical exercise in precision, diligence, and strategic foresight. This principle compels an examination of your own operational framework. How robust are your internal procedures for calculating termination amounts?

Is the process for gathering market data, documenting decisions, and stress-testing valuations sufficiently rigorous to withstand judicial scrutiny under a “commercially reasonable” standard? The knowledge that a submitted calculation is effectively final should prompt a systemic review of the internal controls and expertise dedicated to this function. Viewing this not as a limitation, but as a design feature for market integrity, allows an institution to build a more resilient and defensible operational architecture.

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## Glossary

<a href="https://prime.greeks.live/question/how-does-market-illiquidity-affect-the-validity-of-a-close-out-amount-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Close-Out Amount Calculation

Market illiquidity degrades a close-out amount's validity by replacing executable prices with ambiguous, model-dependent valuations. </a><a href="https://prime.greeks.live/question/can-a-determining-party-still-face-legal-challenges-over-its-close-out-amount-calculation-under-the-2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Close-Out Amount Under

A Determining Party faces legal challenges over its 2002 ISDA close-out calculation due to the required objective commercial reasonableness. </a><a href="https://prime.greeks.live/area/isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Isda Master Agreement

Meaning ▴ The ISDA Master Agreement is a standardized contractual framework for privately negotiated over-the-counter (OTC) derivatives transactions, establishing common terms for a wide array of financial instruments. </a><a href="https://prime.greeks.live/question/how-does-the-choice-of-a-close-out-period-influence-the-overall-initial-margin-calculation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Initial Calculation

The close-out period's length directly scales risk, determining the time horizon for loss potential and thus the total initial margin. </a><a href="https://prime.greeks.live/area/determining-party/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Determining Party

Meaning ▴ The Determining Party is the designated entity, system component, or algorithmic agent possessing the final and binding authority to initiate, validate, or conclude a specific event, transaction, or state transition within a defined operational framework. </a><a href="https://prime.greeks.live/area/close-out-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Close-Out Amount

Meaning ▴ The Close-Out Amount represents the definitive financial value required to terminate a derivatives contract or position, typically calculated upon a default event or a pre-defined termination trigger. </a><a href="https://prime.greeks.live/area/2002-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## 2002 Isda Master Agreement

Meaning ▴ The 2002 ISDA Master Agreement represents a standardized bilateral contractual framework for over-the-counter (OTC) derivatives transactions. </a><a href="https://prime.greeks.live/area/early-termination/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Early Termination

Meaning ▴ A contractual provision or systemic mechanism enabling pre-scheduled cessation of a derivative instrument or financial agreement prior to its original maturity. </a><a href="https://prime.greeks.live/question/what-are-the-key-differences-between-a-prime-brokerage-agreement-and-an-isda-master-agreement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Master Agreement

A Prime Brokerage Agreement is a centralized service contract; an ISDA Master Agreement is a standardized bilateral derivatives protocol. </a><a href="https://prime.greeks.live/area/commercially-reasonable-procedures/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, metallic module with a dark, reflective sphere sits atop a cylindrical base, symbolizing an institutional-grade Crypto Derivatives OS. This system processes aggregated inquiries for RFQ protocols, enabling high-fidelity execution of multi-leg spreads while managing gamma exposure and slippage within dark pools](https://options.greeks.live/wp-content/uploads/2025/07/principal-trading-crypto-derivatives-rfq-protocol-execution-system.jpg)

## Commercially Reasonable Procedures

Meaning ▴ Commercially Reasonable Procedures defines the standard of conduct for actions taken within a financial context, mandating diligence and adherence to prevailing market practices and conditions. </a><a href="https://prime.greeks.live/area/commercially-reasonable/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek metallic panels expose a circuit board, its glowing blue-green traces symbolizing dynamic market microstructure and intelligence layer data flow. A silver stylus embodies a Principal's precise interaction with a Crypto Derivatives OS, enabling high-fidelity execution via RFQ protocols for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-microstructure-os.jpg)

## Commercially Reasonable

Meaning ▴ Commercially Reasonable refers to actions, terms, or conditions that a prudent party would undertake or accept in a similar business context, aiming to achieve a desired outcome efficiently and effectively while considering prevailing market conditions, industry practices, and available alternatives. </a><a href="https://prime.greeks.live/area/commercial-reasonableness/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A translucent teal dome, brimming with luminous particles, symbolizes a dynamic liquidity pool within an RFQ protocol. Precisely mounted metallic hardware signifies high-fidelity execution and the core intelligence layer for institutional digital asset derivatives, underpinned by granular market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core-intelligence-layer.jpg)

## Commercial Reasonableness

Meaning ▴ Commercial reasonableness refers to the standard by which a transaction or action is judged to be consistent with prevailing market practices, industry norms, and sound business judgment, particularly concerning pricing, terms, and execution methodology. </a><a href="https://prime.greeks.live/area/termination-payment/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A complex, multi-layered electronic component with a central connector and fine metallic probes. This represents a critical Prime RFQ module for institutional digital asset derivatives trading, enabling high-fidelity execution of RFQ protocols, price discovery, and atomic settlement for multi-leg spreads with minimal latency](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-rfq-engine-driving-best-execution-and-liquidity.jpg)

## Termination Payment

Meaning ▴ A Termination Payment represents a pre-determined financial obligation arising from the early cessation or default of a derivatives contract or portfolio. </a><a href="https://prime.greeks.live/area/good-faith/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intricate mechanisms represent a Principal's operational framework, showcasing market microstructure of a Crypto Derivatives OS. Transparent elements signify real-time price discovery and high-fidelity execution, facilitating robust RFQ protocols for institutional digital asset derivatives and options trading](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-protocol-engine-for-institutional-digital-asset-derivatives.jpg)

## Good Faith

Meaning ▴ Good Faith, in a financial and operational context, denotes the adherence to honest intent and absence of fraudulent or deceptive conduct during contractual agreements and transactional processes. </a><a href="https://prime.greeks.live/area/market-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstractly depicting an Institutional Grade Crypto Derivatives OS component. Its robust structure and metallic interface signify precise Market Microstructure for High-Fidelity Execution of RFQ Protocol and Block Trade orders](https://options.greeks.live/wp-content/uploads/2025/07/principals-integrated-crypto-derivatives-rfq-protocol-architecture.jpg)

## Market Data

Meaning ▴ Market Data comprises the real-time or historical pricing and trading information for financial instruments, encompassing bid and ask quotes, last trade prices, cumulative volume, and order book depth. </a><a href="https://prime.greeks.live/area/2002-isda/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A balanced blue semi-sphere rests on a horizontal bar, poised above diagonal rails, reflecting its form below. This symbolizes the precise atomic settlement of a block trade within an RFQ protocol, showcasing high-fidelity execution and capital efficiency in institutional digital asset derivatives markets, managed by a Prime RFQ with minimal slippage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-6.jpg)

## 2002 Isda

Meaning ▴ The 2002 ISDA Master Agreement constitutes a standardized contractual framework, widely adopted within the over-the-counter (OTC) derivatives market, establishing foundational terms for bilateral derivatives transactions. </a><a href="https://prime.greeks.live/area/section-6d-statement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Detailed metallic disc, a Prime RFQ core, displays etched market microstructure. Its central teal dome, an intelligence layer, facilitates price discovery](https://options.greeks.live/wp-content/uploads/2025/07/principal-operating-system-intelligence-layer-powering-digital-asset-derivatives-rfq-protocols-for-optimal-execution.jpg)

## Section 6(D) Statement

Meaning ▴ A Section 6(d) Statement constitutes a formal regulatory submission to the Commodity Futures Trading Commission (CFTC), asserting that specific agreements, contracts, or transactions, particularly those involving digital asset derivatives, qualify for an exemption from certain provisions of the Commodity Exchange Act (CEA). </a>

**Tags:** [Early Termination](https://options.greeks.live/area/early-termination/), [Commercially Reasonable Procedures](https://options.greeks.live/area/commercially-reasonable-procedures/), [Commercial Reasonableness](https://options.greeks.live/area/commercial-reasonableness/), [Calculation Dispute](https://options.greeks.live/area/calculation-dispute/), [Derivatives Close-Out](https://options.greeks.live/area/derivatives-close-out/), [Commercially Reasonable](https://options.greeks.live/area/commercially-reasonable/)	

## Discover More

- 
### [What Are the Key Differences between Market Quotation and Close-Out Amount Valuation Methods?](https://options.greeks.live/question/what-are-the-key-differences-between-market-quotation-and-close-out-amount-valuation-methods/)
![A sleek, spherical intelligence layer component with internal blue mechanics and a precision lens. It embodies a Principal's private quotation system, driving high-fidelity execution and price discovery for digital asset derivatives through RFQ protocols, optimizing market microstructure and minimizing latency.](https://options.greeks.live/wp-content/uploads/2025/08/principals-private-quotation-system-intelligence-layer-component.jpg)

Market Quotation is a rigid, quote-driven valuation, while Close-Out Amount is a flexible, principles-based method for derivatives.

- 
### [What Constitutes a Commercially Reasonable Determination under the Close out Amount Methodology?](https://options.greeks.live/question/what-constitutes-a-commercially-reasonable-determination-under-the-close-out-amount-methodology/)
![An abstract composition depicts a glowing green vector slicing through a segmented liquidity pool and principal's block. This visualizes high-fidelity execution and price discovery across market microstructure, optimizing RFQ protocols for institutional digital asset derivatives, minimizing slippage and latency.](https://options.greeks.live/wp-content/uploads/2025/07/optimal-precise-digital-asset-derivative-rfq-execution-via-smart-protocols-for-institutional-trading.jpg)

A commercially reasonable determination is an objective, evidence-based calculation of the economic cost of replacing a terminated derivative.

- 
### [What Constitutes a Commercially Reasonable Procedure in a Close-Out?](https://options.greeks.live/question/what-constitutes-a-commercially-reasonable-procedure-in-a-close-out/)
![An Institutional Grade RFQ Engine core for Digital Asset Derivatives. This Prime RFQ Intelligence Layer ensures High-Fidelity Execution, driving Optimal Price Discovery and Atomic Settlement for Aggregated Inquiries.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-high-fidelity.jpg)

A commercially reasonable close-out is the systematic, good-faith execution of a defensible valuation to crystallize risk into a fair value.

- 
### [How Does the 2002 ISDA Close-Out Amount Differ from the 1992 Loss Calculation?](https://options.greeks.live/question/how-does-the-2002-isda-close-out-amount-differ-from-the-1992-loss-calculation/)
![An institutional-grade platform's RFQ protocol interface, with a price discovery engine and precision guides, enables high-fidelity execution for digital asset derivatives. Integrated controls optimize market microstructure and liquidity aggregation within a Principal's operational framework.](https://options.greeks.live/wp-content/uploads/2025/07/proprietary-institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-granular-market-microstructure-analysis-for-prime-os.jpg)

The 2002 ISDA's Close-Out Amount mandates an objectively reasonable process, replacing the 1992's more subjective Loss standard.

- 
### [In What Ways Does the Close out Amount Provision Affect a Firm’s Internal Valuation and Risk Management Systems?](https://options.greeks.live/question/in-what-ways-does-the-close-out-amount-provision-affect-a-firms-internal-valuation-and-risk-management-systems/)
![A central metallic bar, representing an RFQ block trade, pivots through translucent geometric planes symbolizing dynamic liquidity pools and multi-leg spread strategies. This illustrates a Principal's operational framework for high-fidelity execution and atomic settlement within a sophisticated Crypto Derivatives OS, optimizing private quotation workflows.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-facilitating-high-fidelity-price-discovery-and-optimal-capital-efficiency-within-advanced-market-microstructure.jpg)

The Close-Out Amount provision forces a firm's systems to pivot from dynamic valuation to a static, evidence-based replacement cost protocol.

- 
### [Can a Determining Party Choose the Most Favorable Outcome within a Reasonable Range?](https://options.greeks.live/question/can-a-determining-party-choose-the-most-favorable-outcome-within-a-reasonable-range/)
![A polished blue sphere representing a digital asset derivative rests on a metallic ring, symbolizing market microstructure and RFQ protocols, supported by a foundational beige sphere, an institutional liquidity pool. A smaller blue sphere floats above, denoting atomic settlement or a private quotation within a Principal's Prime RFQ for high-fidelity execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-market-microstructure-and-rfq-protocols.jpg)

A Determining Party must act within an objectively reasonable range and cannot simply choose the most favorable outcome.

- 
### [What Constitutes a Commercially Reasonable Procedure under the 2002 ISDA?](https://options.greeks.live/question/what-constitutes-a-commercially-reasonable-procedure-under-the-2002-isda/)
![A crystalline droplet, representing a block trade or liquidity pool, rests precisely on an advanced Crypto Derivatives OS platform. Its internal shimmering particles signify aggregated order flow and implied volatility data, demonstrating high-fidelity execution and capital efficiency within market microstructure, facilitating private quotation via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-protocol-best-execution.jpg)

A commercially reasonable procedure under the 2002 ISDA is an objective, defensible process for valuing a terminated derivative.

- 
### [How Does the Rationality Standard of the 1992 ISDA Differ from the 2002 Standard?](https://options.greeks.live/question/how-does-the-rationality-standard-of-the-1992-isda-differ-from-the-2002-standard/)
![A transparent, multi-faceted component, indicative of an RFQ engine's intricate market microstructure logic, emerges from complex FIX Protocol connectivity. Its sharp edges signify high-fidelity execution and price discovery precision for institutional digital asset derivatives. This Prime RFQ module optimizes algorithmic trading and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-best-execution.jpg)

The 2002 ISDA standard mandates an objective, commercially reasonable process and result, replacing the 1992's subjective rationality test.

- 
### [How Can a Firm Prove Its Close-Out Calculation Was Commercially Reasonable in Court?](https://options.greeks.live/question/how-can-a-firm-prove-its-close-out-calculation-was-commercially-reasonable-in-court/)
![A metallic disc intersected by a dark bar, over a teal circuit board. This visualizes Institutional Liquidity Pool access via RFQ Protocol, enabling Block Trade Execution of Digital Asset Options with High-Fidelity Execution. It signifies Market Microstructure Optimization and Atomic Settlement on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-principal-operational-framework-market-microstructure-high-fidelity-execution.jpg)

A firm proves its close-out calculation was commercially reasonable by systematically executing a pre-defined, evidence-based valuation protocol.

---

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---

**Original URL:** https://options.greeks.live/question/can-a-determining-party-revise-its-close-out-amount-calculation-after-submission/
