# How Does a Higher Threshold Amount in a Cross Default Clause Benefit a Hedge Fund? ▴ Question

**Published:** 2025-08-04
**Categories:** Question

---

![A vertically stacked assembly of diverse metallic and polymer components, resembling a modular lens system, visually represents the layered architecture of institutional digital asset derivatives. Each distinct ring signifies a critical market microstructure element, from RFQ protocol layers to aggregated liquidity pools, ensuring high-fidelity execution and capital efficiency within a Prime RFQ framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-execution-stack.jpg)

![A sleek, multi-component device with a dark blue base and beige bands culminates in a sophisticated top mechanism. This precision instrument symbolizes a Crypto Derivatives OS facilitating RFQ protocol for block trade execution, ensuring high-fidelity execution and atomic settlement for institutional-grade digital asset derivatives across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/08/advanced-mechanism-for-principal-trading-firm-rfq-protocols-and-high-fidelity-digital-asset-derivatives-execution.jpg)

## Concept

Within the intricate architecture of institutional finance, the cross-default clause of an ISDA Master Agreement functions as a critical, system-wide sensor. Its purpose is to detect financial distress in one area of a counterparty’s operations and grant the right to terminate [derivatives contracts](https://prime.greeks.live/area/derivatives-contracts/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), even if no default has occurred under the ISDA itself. The “Threshold Amount” is the calibration of this sensor. It defines the magnitude of a default on “[Specified Indebtedness](https://prime.greeks.live/area/specified-indebtedness/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” ▴ typically borrowed money ▴ that must be breached before the sensor is tripped.

For a hedge fund, negotiating a higher [Threshold Amount](https://prime.greeks.live/area/threshold-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a deliberate act of structural [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). It is the architectural equivalent of raising a sea wall; it prevents minor, localized tremors from triggering a systemic tsunami that could liquidate the fund’s entire derivatives portfolio.

A [higher threshold](https://prime.greeks.live/question/how-might-a-higher-lis-threshold-change-the-business-model-for-venues-that-specialize-in-block-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) provides a buffer zone, a pre-defined quantum of financial stress that can be absorbed without initiating a catastrophic failure of its contractual network. Consider a large, multi-strategy hedge fund with a small, distressed debt position in a [portfolio company](https://prime.greeks.live/question/in-the-absence-of-market-prices-how-do-experts-establish-a-defensible-value-for-private-company-shares/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). If that company defaults on a loan, and the amount is below the fund’s negotiated Threshold Amount in its prime brokerage and swap agreements, the event is contained. It is a manageable loss, handled by the relevant desk.

If the amount exceeds a low threshold, that single event could give every one of the fund’s ISDA counterparties the right to terminate their positions, demand immediate settlement, and seize collateral. This transforms a contained portfolio loss into a liquidity crisis that threatens the entire fund’s existence. The higher threshold is therefore a foundational element of operational resilience, providing the fund with the stability needed to execute its broader strategies without being derailed by isolated, immaterial events.

> A higher cross-default threshold acts as a critical buffer, insulating a hedge fund’s core operations from minor, non-systemic financial defaults.

This negotiation is a sophisticated signal within the market. By successfully securing a high threshold, a [hedge fund](https://prime.greeks.live/area/hedge-fund/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) projects an image of financial strength and stability. It demonstrates to its dealer counterparties that its balance sheet is robust enough to absorb minor shocks. This signal is potent.

Dealers are more willing to provide favorable terms and extend credit to a fund that has architected its legal agreements to withstand volatility. The higher threshold amount becomes a testament to the fund’s institutional quality, a key differentiator in a crowded market. It allows the fund to operate with a greater degree of freedom, knowing that its core trading relationships are shielded from the inevitable bumps that occur in complex, multi-asset class investment strategies.

![Metallic, reflective components depict high-fidelity execution within market microstructure. A central circular element symbolizes an institutional digital asset derivative, like a Bitcoin option, processed via RFQ protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution.jpg)

![The image depicts two intersecting structural beams, symbolizing a robust Prime RFQ framework for institutional digital asset derivatives. These elements represent interconnected liquidity pools and execution pathways, crucial for high-fidelity execution and atomic settlement within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-cross-market-execution-architecture-for-digital-assets.jpg)

## Strategy

The strategic deployment of a higher [cross-default Threshold](https://prime.greeks.live/area/cross-default-threshold/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Amount is a masterclass in defensive legal architecture for a hedge fund. It moves beyond a simple contractual term to become a central pillar of the fund’s risk management and counterparty relationship strategy. The primary strategic objective is to decouple minor operational or investment-specific defaults from the fund’s systemic financial health, thereby preventing a contagion effect. A low threshold creates a tightly coupled system where a single point of failure ▴ like a default on a small loan to a portfolio company ▴ can cascade across all of the fund’s financing and trading agreements, leading to a catastrophic liquidity event.

![A precision optical system with a reflective lens embodies the Prime RFQ intelligence layer. Gray and green planes represent divergent RFQ protocols or multi-leg spread strategies for institutional digital asset derivatives, enabling high-fidelity execution and optimal price discovery within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligent-core-driving-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-across-diverse-liquidity-pools-for-optimal-price-discovery.jpg)

## Architecting Financial Firewalls

A hedge fund’s legal and risk teams work to construct a “financial firewall” using the Threshold Amount. The goal is to set the threshold at a level that is material to the fund’s overall solvency but well above the quantum of potential defaults from non-core activities. For instance, a $10 billion fund might negotiate a Threshold Amount of $100 million or even $200 million. This ensures that a default on a $20 million credit line by a portfolio company, while a negative event, remains an isolated incident.

It does not breach the firewall and does not give the fund’s prime brokers the right to liquidate its entire book of swaps and other derivatives. This strategic insulation is paramount for funds engaged in private equity, venture capital, or distressed debt, where defaults are a recognized part of the investment lifecycle.

![A Prime RFQ interface for institutional digital asset derivatives displays a block trade module and RFQ protocol channels. Its low-latency infrastructure ensures high-fidelity execution within market microstructure, enabling price discovery and capital efficiency for Bitcoin options](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-rfq-protocol-engine-high-fidelity-execution-digital-asset-derivatives.jpg)

## What Is the Strategic Value of a Higher Threshold?

The strategic value lies in preserving operational continuity. A fund that is constantly at risk of tripping a low cross-default threshold is a fund that cannot take calculated risks. Every investment decision must be weighed against the possibility of triggering a systemic collapse. By negotiating a higher threshold, the fund liberates its portfolio managers to pursue alpha-generating strategies, confident that the core of the fund is protected.

This is a profound competitive advantage. It allows the fund to allocate capital more efficiently and to engage in a wider range of investment activities than a competitor with a more fragile contractual architecture.

> By setting a high cross-default threshold, a hedge fund strategically decouples isolated financial events from its core derivatives portfolio, preserving operational continuity.

![Abstract geometric design illustrating a central RFQ aggregation hub for institutional digital asset derivatives. Radiating lines symbolize high-fidelity execution via smart order routing across dark pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-high-fidelity-execution-architecture.jpg)

## Negotiation as a Signal of Strength

The negotiation of the [ISDA Schedule](https://prime.greeks.live/area/isda-schedule/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a game of information asymmetry. The dealer seeks to minimize its risk by pushing for the most protective terms possible, which often includes a low Threshold Amount for the hedge fund. A hedge fund that can successfully argue for and secure a high threshold is making a powerful statement about its financial health, risk management processes, and institutional quality. It signals that the fund has a sophisticated understanding of its own risk profile and is confident in its ability to manage its obligations.

This table illustrates the negotiating posture of a hedge fund versus a dealer bank concerning the [cross-default clause](https://prime.greeks.live/area/cross-default-clause/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite):

| Provision Component | Hedge Fund’s Preferred Position | Dealer’s Default Position | Strategic Rationale for Hedge Fund |
| --- | --- | --- | --- |
| Threshold Amount | High (e.g. 2-3% of NAV) | Low (e.g. a fixed low-dollar amount like $10M) | Provides a buffer for minor defaults, prevents premature termination rights for the dealer, and signals financial stability. |
| Specified Indebtedness | Limited to borrowed money only. | Expanded to include derivatives and other financing agreements. | Restricts the trigger to genuine credit defaults, excluding technical or operational issues in other trading agreements. |
| Cross-Acceleration vs. Cross-Default | Cross-Acceleration only. | Cross-Default. | Requires the third-party creditor to actually accelerate the debt before a default is triggered under the ISDA, providing an additional layer of protection. |
| Application | Applied bilaterally to both parties. | Applied unilaterally to the hedge fund only. | Ensures that the risk management protocol is fair and that the dealer is also held to a standard of financial stability. |

![Polished metallic pipes intersect via robust fasteners, set against a dark background. This symbolizes intricate Market Microstructure, RFQ Protocols, and Multi-Leg Spread execution](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-metallic-nodes-illustrating-rfq-protocols-for-multi-leg-digital-asset-derivatives-institutional-execution.jpg)

## Managing Counterparty Perception

Ultimately, a higher threshold helps manage counterparty perception. In times of market stress, dealers will scrutinize their exposures. A fund with a low cross-default threshold is a high-risk counterparty. It is more likely to be the subject of pre-emptive actions, such as increased margin requirements or a refusal to roll over trades.

A fund with a robust, high threshold is viewed as a more stable and reliable partner. This perception can be invaluable, providing access to liquidity and favorable terms when they are most needed. The higher threshold is a strategic asset that pays dividends in the form of enhanced counterparty confidence.

![A precise RFQ engine extends into an institutional digital asset liquidity pool, symbolizing high-fidelity execution and advanced price discovery within complex market microstructure. This embodies a Principal's operational framework for multi-leg spread strategies and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-interfacing-core-liquidity-system.jpg)

![Abstract geometric representation of an institutional RFQ protocol for digital asset derivatives. Two distinct segments symbolize cross-market liquidity pools and order book dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-2.jpg)

## Execution

The execution of a strategy centered on a higher cross-default Threshold Amount is a meticulous process that lives within the arcane details of the ISDA Schedule. It requires a deep, quantitative understanding of the fund’s risk profile and a precise, assertive approach to legal negotiation. This is where the architectural vision of risk management is translated into the hard-coded reality of a legal agreement. The objective is to implement a threshold that is not merely a number, but a carefully calibrated risk parameter that optimizes the fund’s operational latitude while maintaining a credible commitment to its counterparties.

![A sleek metallic device with a central translucent sphere and dual sharp probes. This symbolizes an institutional-grade intelligence layer, driving high-fidelity execution for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-precision.jpg)

## Quantitative Modeling of the Threshold Amount

The determination of the “correct” Threshold Amount is a quantitative exercise. The fund’s risk and legal teams must model various scenarios to understand the potential sources of default within their operations and investments. This involves a granular analysis of all “Specified Indebtedness” across the entire fund structure.

The process includes:

- **Mapping Indebtedness** ▴ A complete mapping of all credit lines, loans, and other forms of borrowed money across the master fund, feeder funds, and any special purpose vehicles (SPVs) or portfolio companies where the fund has guaranteed debt.

- **Scenario Analysis** ▴ Modeling the impact of defaults of varying sizes. For example, what is the probability of a default of $5 million, $25 million, or $100 million? This analysis should consider both market-wide stressors and idiosyncratic, name-specific events.

- **Setting the Threshold** ▴ The Threshold Amount should be set above the level of “background noise” defaults but below a level that would represent a genuine threat to the fund’s solvency. A common approach is to peg it to a percentage of the fund’s [Net Asset Value](https://prime.greeks.live/area/net-asset-value/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (NAV), such as 2% or 3%. This ensures the threshold scales with the fund’s size and is always material.

![A sleek device showcases a rotating translucent teal disc, symbolizing dynamic price discovery and volatility surface visualization within an RFQ protocol. Its numerical display suggests a quantitative pricing engine facilitating algorithmic execution for digital asset derivatives, optimizing market microstructure through an intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-for-digital-asset-rfq-execution-system-with-smart-liquidity-routing.jpg)

## How Does a Fund Justify a Higher Threshold to a Dealer?

A fund justifies a higher threshold by presenting a clear, data-driven case to the dealer. This involves showcasing the fund’s robust internal risk controls, its low leverage, its diversified investment strategy, and its history of operational stability. The fund is essentially demonstrating that a low threshold is an inappropriate and inefficient risk mitigant for an institution of its quality. The negotiation becomes a discussion about calibrating the risk tool to the actual risk profile of the entity.

> Executing a higher threshold strategy requires precise quantitative modeling to set a level that absorbs operational noise without masking genuine solvency threats.

![A reflective, metallic platter with a central spindle and an integrated circuit board edge against a dark backdrop. This imagery evokes the core low-latency infrastructure for institutional digital asset derivatives, illustrating high-fidelity execution and market microstructure dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-infrastructure-precision.jpg)

## A Comparative Analysis of Threshold Impact

The following table provides a quantitative case study of the impact of a high versus a low Threshold Amount for a hypothetical $5 billion hedge fund. The fund has a non-core investment in a technology company, which defaults on a $25 million loan that the fund had guaranteed.

| Scenario Parameter | Scenario A ▴ Low Threshold ($15 Million) | Scenario B ▴ High Threshold ($100 Million) |
| --- | --- | --- |
| Default Event | Portfolio company defaults on a $25 million loan. | Portfolio company defaults on a $25 million loan. |
| Threshold Breach? | Yes ($25M > $15M). | No ($25M < $100M). |
| Immediate Consequence | Cross-Default Event of Default is triggered under all ISDA Master Agreements. | No Cross-Default is triggered. The event is contained. |
| Counterparty Action | All 10 of the fund’s ISDA counterparties have the right to terminate their transactions and issue Early Termination Notices. | Counterparties have no right to act under the cross-default provision. Business as usual. |
| Financial Impact | Forced liquidation of a $2 billion derivatives book into a stressed market, potentially leading to hundreds of millions in losses beyond the initial $25 million. A severe liquidity crisis ensues. | The fund records a $25 million loss on its investment. The derivatives portfolio is unaffected. The loss is managed as a standard investment outcome. |
| Operational Impact | Catastrophic. The fund is now in default with all its major counterparties, its reputation is damaged, and it may face insolvency. | Minimal. The distressed asset team manages the workout of the defaulted loan. The fund’s core operations continue uninterrupted. |

![A teal sphere with gold bands, symbolizing a discrete digital asset derivative block trade, rests on a precision electronic trading platform. This illustrates granular market microstructure and high-fidelity execution within an RFQ protocol, driven by a Prime RFQ intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivative-rfq-protocol-high-fidelity-execution-platform-microstructure-intelligence-layer.jpg)

## Drafting the Clause Precise Language

The execution phase culminates in the legal drafting within the ISDA Schedule. The fund’s counsel must ensure the language is precise and unambiguous. Key considerations include:

- **The Definition of “Specified Indebtedness”** ▴ The fund will push to keep this definition as narrow as possible, ideally restricted to obligations for the repayment of borrowed money. Dealers will try to expand it to include obligations under other derivatives contracts or financing arrangements. This is a critical battleground.

- **The “[Cross-Acceleration](https://prime.greeks.live/area/cross-acceleration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” Modification** ▴ A sophisticated enhancement is to modify the clause to only trigger upon “cross-acceleration” rather than “cross-default.” This means the third-party creditor must actually demand immediate repayment of the defaulted debt, not just have the right to do so. This provides a valuable timing buffer for the fund to cure the default before the ISDA is affected.

- **Carve-Outs for Administrative Errors** ▴ The fund may also negotiate a carve-out for defaults that are the result of administrative or operational errors, provided they are cured within a short period (e.g. one or two business days). This prevents a simple operational mistake from triggering a systemic event.

By focusing on these quantitative and legal execution details, a hedge fund transforms the cross-default clause from a standard boilerplate provision into a finely tuned instrument of strategic risk management, creating a resilient operational framework that provides a durable competitive edge.

![A central dark aperture, like a precision matching engine, anchors four intersecting algorithmic pathways. Light-toned planes represent transparent liquidity pools, contrasting with dark teal sections signifying dark pool or latent liquidity](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-9.jpg)

## References

- Koya, Tei. “The Credit and Legal Risks of Entering into an ISDA Master Agreement.” Koya Law, 2022.

- Ropes & Gray LLP. “Hedge Funds And ISDA Master Agreements ▴ Drafting Considerations In A Fluid Market.” 2008.

- The Hedge Fund Law Report. “Best Practices for Fund Managers When Entering Into ISDAs ▴ Negotiation Process and Tactics (Part One of Three).” 2017.

- Contrarian, The Jolly. “Cross Default – ISDA Provision.” 2024.

- ISDA. “LEGAL GUIDELINES FOR SMART DERIVATIVES CONTRACTS ▴ THE ISDA MASTER AGREEMENT.” 2019.

![Stacked, distinct components, subtly tilted, symbolize the multi-tiered institutional digital asset derivatives architecture. Layers represent RFQ protocols, private quotation aggregation, core liquidity pools, and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/layered-institutional-digital-asset-derivatives-rfq-protocols-optimizing-principal-execution-management-systems-for-best-execution.jpg)

## Reflection

The architecture of a hedge fund’s legal agreements is the invisible framework that supports its entire investment strategy. The calibration of a single parameter, the cross-default Threshold Amount, reveals the depth of a fund’s approach to systemic risk. It prompts a deeper inquiry into the fund’s own operational resilience. How are your contractual obligations structured?

Are they designed to withstand the pressures of isolated, non-critical failures, or do they create a fragile system, susceptible to a catastrophic cascade from a single point of weakness? The knowledge of this mechanism is a component in a larger system of institutional intelligence. The ultimate strategic advantage lies in building an operational framework where every component, from the most complex trading algorithm to the most arcane legal clause, is engineered for resilience and capital efficiency.

![A dark, textured module with a glossy top and silver button, featuring active RFQ protocol status indicators. This represents a Principal's operational framework for high-fidelity execution of institutional digital asset derivatives, optimizing atomic settlement and capital efficiency within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-interface-1.jpg)

## Glossary

<a href="https://prime.greeks.live/area/specified-indebtedness/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![The image displays a sleek, intersecting mechanism atop a foundational blue sphere. It represents the intricate market microstructure of institutional digital asset derivatives trading, facilitating RFQ protocols for block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-execution.jpg)

## Specified Indebtedness

Meaning ▴ Specified Indebtedness refers to a precisely defined category of financial obligations or liabilities that are subject to particular legal, regulatory, or contractual terms and conditions. </a><a href="https://prime.greeks.live/area/derivatives-contracts/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A stacked, multi-colored modular system representing an institutional digital asset derivatives platform. The top unit facilitates RFQ protocol initiation and dynamic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-15.jpg)

## Derivatives Contracts

Meaning ▴ Derivatives Contracts in the crypto space are financial instruments whose value is derived from an underlying crypto asset, such as Bitcoin or Ethereum. </a><a href="https://prime.greeks.live/area/threshold-amount/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

## Threshold Amount

Meaning ▴ A Threshold Amount in crypto systems refers to a predefined quantitative limit or trigger value that, when met or exceeded, initiates a specific action, imposes a restriction, or requires a heightened level of review. </a><a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision metallic instrument with a black sphere rests on a multi-layered platform. This symbolizes institutional digital asset derivatives market microstructure, enabling high-fidelity execution and optimal price discovery across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-component-digital-asset-derivatives-market-microstructure.jpg)

## Risk Management

Meaning ▴ Risk Management, within the cryptocurrency trading domain, encompasses the comprehensive process of identifying, assessing, monitoring, and mitigating the multifaceted financial, operational, and technological exposures inherent in digital asset markets. </a><a href="https://prime.greeks.live/question/in-the-absence-of-market-prices-how-do-experts-establish-a-defensible-value-for-private-company-shares/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, metallic, modular hardware with visible circuit elements, symbolizing the market microstructure for institutional digital asset derivatives. This low-latency infrastructure supports RFQ protocols, enabling high-fidelity execution for private quotation and block trade settlement, ensuring capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/08/market-microstructure-engine-for-crypto-derivatives-rfq-protocol.jpg)

## Portfolio Company

Experts value private shares by constructing a financial system that triangulates value via market, intrinsic, and asset-based analyses. </a><a href="https://prime.greeks.live/question/how-might-a-higher-lis-threshold-change-the-business-model-for-venues-that-specialize-in-block-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precisely aligned forms depict an institutional trading system's RFQ protocol interface. Circular elements symbolize market data feeds and price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-interface-optimization.jpg)

## Higher Threshold

A higher LIS threshold forces block trading venues to evolve from simple matching engines to sophisticated execution solution providers. </a><a href="https://prime.greeks.live/area/hedge-fund/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, light-colored, egg-shaped component precisely connects to a darker, ergonomic base, signifying high-fidelity integration. This modular design embodies an institutional-grade Crypto Derivatives OS, optimizing RFQ protocols for atomic settlement and best execution within a robust Principal's operational framework, enhancing market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-principal-system.jpg)

## Hedge Fund

Meaning ▴ A Hedge Fund in the crypto investing sphere is a privately managed investment vehicle that employs a diverse array of sophisticated strategies, often utilizing leverage and derivatives, to generate absolute returns for its qualified investors, irrespective of overall market direction. </a><a href="https://prime.greeks.live/area/cross-default-threshold/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered metallic and glass system depicts the core of an Institutional Grade Prime RFQ, facilitating high-fidelity execution for Digital Asset Derivatives. Transparent layers represent visible liquidity pools and the intricate market microstructure supporting RFQ protocol processing, ensuring atomic settlement capabilities](https://options.greeks.live/wp-content/uploads/2025/08/robust-institutional-digital-asset-derivatives-trading-platform-for-optimized-rfq-protocol-execution-and-deep-liquidity-access.jpg)

## Cross-Default Threshold

Meaning ▴ A Cross-Default Threshold specifies a level of default or breach in one financial agreement that automatically triggers a default across other related agreements with the same counterparty. </a><a href="https://prime.greeks.live/area/isda-schedule/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, angular Prime RFQ interface component featuring a vibrant teal sphere, symbolizing a precise control point for institutional digital asset derivatives. This represents high-fidelity execution and atomic settlement within advanced RFQ protocols, optimizing price discovery and liquidity across complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-control-point.jpg)

## Isda Schedule

Meaning ▴ The ISDA Schedule is a component of the ISDA Master Agreement, a standardized contract used extensively in the over-the-counter (OTC) derivatives market. </a><a href="https://prime.greeks.live/area/cross-default-clause/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central core, symbolizing a Crypto Derivatives OS and Liquidity Pool, is intersected by two abstract elements. These represent Multi-Leg Spread and Cross-Asset Derivatives executed via RFQ Protocol](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-multi-leg-spread-execution.jpg)

## Cross-Default Clause

Meaning ▴ A Cross-Default Clause is a contractual provision stipulating that a default by one party on any debt or obligation owed to the other party, or to a third party, triggers a default on the specific contract containing the clause. </a><a href="https://prime.greeks.live/area/net-asset-value/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A blue speckled marble, symbolizing a precise block trade, rests centrally on a translucent bar, representing a robust RFQ protocol. This structured geometric arrangement illustrates complex market microstructure, enabling high-fidelity execution, optimal price discovery, and efficient liquidity aggregation within a principal's operational framework for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-rfq-execution-framework-optimizing-digital-asset-derivatives-liquidity-aggregation-across-complex-market-microstructure.jpg)

## Net Asset Value

Meaning ▴ Net Asset Value (NAV), in the context of crypto investing, represents the total value of a fund's or protocol's assets minus its liabilities, divided by the number of outstanding shares or units. </a><a href="https://prime.greeks.live/area/cross-acceleration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise stack of multi-layered circular components visually representing a sophisticated Principal Digital Asset RFQ framework. Each distinct layer signifies a critical component within market microstructure for high-fidelity execution of institutional digital asset derivatives, embodying liquidity aggregation across dark pools, enabling private quotation and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-rfq-protocol-layers-for-high-fidelity-execution.jpg)

## Cross-Acceleration

Meaning ▴ Cross-Acceleration is a contractual clause or protocol feature stipulating that a default on one financial obligation automatically triggers a default on other related obligations with the same counterparty or within a linked financial system. </a>

**Tags:** [Net Asset Value](https://options.greeks.live/area/net-asset-value/), [ISDA Schedule](https://options.greeks.live/area/isda-schedule/), [Specified Indebtedness](https://options.greeks.live/area/specified-indebtedness/), [Hedge Fund Risk Management](https://options.greeks.live/area/hedge-fund-risk-management/), [Prime Brokerage](https://options.greeks.live/area/prime-brokerage/), [Master Agreement](https://options.greeks.live/area/master-agreement/)	

## Discover More

- 
### [What Are the Key Differences between a Cross-Default and a Cross-Acceleration Provision in an ISDA?](https://options.greeks.live/question/what-are-the-key-differences-between-a-cross-default-and-a-cross-acceleration-provision-in-an-isda/)
![A cutaway view reveals an advanced RFQ protocol engine for institutional digital asset derivatives. Intricate coiled components represent algorithmic liquidity provision and portfolio margin calculations. Translucent sections expose the quantitative analytics core enabling high-fidelity execution and low-latency order routing for Bitcoin options.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-digital-asset-derivatives-core-internal-mechanism-visualized.jpg)

A cross-default is triggered by the potential for another debt to be accelerated; cross-acceleration requires the actual acceleration of that debt.

- 
### [How Does the Close-Out Amount Affect Counterparty Risk Management Strategies?](https://options.greeks.live/question/how-does-the-close-out-amount-affect-counterparty-risk-management-strategies/)
![Intricate circuit boards and a precision metallic component depict the core technological infrastructure for Institutional Digital Asset Derivatives trading. This embodies high-fidelity execution and atomic settlement through sophisticated market microstructure, facilitating RFQ protocols for private quotation and block trade liquidity within a Crypto Derivatives OS.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-crypto-derivatives-execution-system-microstructure.jpg)

The close-out amount is a calculated valuation that crystallizes the economic consequences of a counterparty default.

- 
### [Can a Party Pre-Agree on What Constitutes Commercially Reasonable Procedures in an ISDA Schedule?](https://options.greeks.live/question/can-a-party-pre-agree-on-what-constitutes-commercially-reasonable-procedures-in-an-isda-schedule/)
![A dark, reflective surface displays a luminous green line, symbolizing a high-fidelity RFQ protocol channel within a Crypto Derivatives OS. This signifies precise price discovery for digital asset derivatives, ensuring atomic settlement and optimizing portfolio margin. A textured element implies the execution management system EMS controlling block trades and multi-leg spreads on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-pathway-optimizing-principal-liquidity-and-capital-efficiency.jpg)

Yes, parties can and should pre-define commercially reasonable procedures in an ISDA Schedule to convert legal ambiguity into operational certainty.

- 
### [What Are the Primary Negotiated Terms within an ISDA Schedule and Credit Support Annex?](https://options.greeks.live/question/what-are-the-primary-negotiated-terms-within-an-isda-schedule-and-credit-support-annex/)
![Precision interlocking components with exposed mechanisms symbolize an institutional-grade platform. This embodies a robust RFQ protocol for high-fidelity execution of multi-leg options strategies, driving efficient price discovery and atomic settlement. It optimizes market microstructure for digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-digital-asset-derivatives-execution-platform.jpg)

The primary negotiated terms of an ISDA Schedule and CSA are the levers for calibrating credit risk and collateral mechanics.

- 
### [What Are the Primary Differences in Counterparty Risk between Lit Exchanges and RFQ Systems?](https://options.greeks.live/question/what-are-the-primary-differences-in-counterparty-risk-between-lit-exchanges-and-rfq-systems/)
![A central blue sphere, representing a Liquidity Pool, balances on a white dome, the Prime RFQ. Perpendicular beige and teal arms, embodying RFQ protocols and Multi-Leg Spread strategies, extend to four peripheral blue elements. This depicts High-Fidelity Execution of Digital Asset Derivatives within complex Market Microstructure, optimizing Capital Efficiency and mitigating Counterparty Risk.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-protocol-execution-framework.jpg)

Lit exchanges mutualize counterparty risk in a central utility, while RFQ systems create a web of bilateral credit exposures.

- 
### [Can a Firm Still Use the 1992 ISDA Master Agreement for New Trades?](https://options.greeks.live/question/can-a-firm-still-use-the-1992-isda-master-agreement-for-new-trades/)
![A refined object featuring a translucent teal element, symbolizing a dynamic RFQ for Institutional Grade Digital Asset Derivatives. Its precision embodies High-Fidelity Execution and seamless Price Discovery within complex Market Microstructure. The reflective surface suggests deep Liquidity Pool access for Block Trade and Private Quotation protocols.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-precision-for-optimal-execution-and-deep-liquidity-aggregation.jpg)

A firm can use the 1992 ISDA Agreement, but it accepts a legacy risk framework with known weaknesses in its close-out architecture.

- 
### [What Are the Primary Counterparty Risks Associated with RFQ-Based Hedging?](https://options.greeks.live/question/what-are-the-primary-counterparty-risks-associated-with-rfq-based-hedging/)
![A complex, reflective apparatus with concentric rings and metallic arms supporting two distinct spheres. This embodies RFQ protocols, market microstructure, and high-fidelity execution for institutional digital asset derivatives. It visualizes price discovery, liquidity pool aggregation, and the Principal's operational framework within a Prime RFQ for atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-3.jpg)

RFQ counterparty risk is a systemic variable managed through rigorous vetting, legal frameworks, and quantitative exposure modeling.

- 
### [How Does Counterparty Risk in OTC Binary Options Differ from Exchange-Traded Derivatives?](https://options.greeks.live/question/how-does-counterparty-risk-in-otc-binary-options-differ-from-exchange-traded-derivatives/)
![Smooth, layered surfaces represent a Prime RFQ Protocol architecture for Institutional Digital Asset Derivatives. They symbolize integrated Liquidity Pool aggregation and optimized Market Microstructure. Two spheres illustrate Atomic Settlement of a Multi-Leg Spread, reflecting High-Fidelity Execution.](https://options.greeks.live/wp-content/uploads/2025/07/market-microstructure-rfq-protocols-for-digital-asset-derivatives.jpg)

Counterparty risk in OTC binary options is a direct, bilateral liability, whereas in exchange-traded derivatives it is mutualized and managed by a central clearinghouse.

- 
### [Can a Sovereign Debt Crisis Trigger a Force Majeure Event in the Derivatives Market?](https://options.greeks.live/question/can-a-sovereign-debt-crisis-trigger-a-force-majeure-event-in-the-derivatives-market/)
![A precision-engineered metallic institutional trading platform, bisected by an execution pathway, features a central blue RFQ protocol engine. This Crypto Derivatives OS core facilitates high-fidelity execution, optimal price discovery, and multi-leg spread trading, reflecting advanced market microstructure.](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-institutional-digital-asset-derivatives-execution-core-facilitating-rfq-protocol-driven-optimal-price-discovery-and-multi-leg-spread-trading-for-capital-efficiency.jpg)

A sovereign debt crisis can trigger a force majeure event if a state action makes contractual performance impossible or illegal.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does a Higher Threshold Amount in a Cross Default Clause Benefit a Hedge Fund?",
            "item": "https://options.greeks.live/question/how-does-a-higher-threshold-amount-in-a-cross-default-clause-benefit-a-hedge-fund/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/how-does-a-higher-threshold-amount-in-a-cross-default-clause-benefit-a-hedge-fund/"
    },
    "headline": "How Does a Higher Threshold Amount in a Cross Default Clause Benefit a Hedge Fund? \u25b4 Question",
    "description": "A higher cross-default threshold provides a hedge fund with critical operational insulation and negotiating leverage. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-a-higher-threshold-amount-in-a-cross-default-clause-benefit-a-hedge-fund/",
    "datePublished": "2025-08-04T22:05:06+00:00",
    "dateModified": "2025-10-25T13:14:25+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-interfacing-core-liquidity-system.jpg",
        "caption": "This abstract dynamically illustrates a sophisticated RFQ engine's integration into an institutional digital asset liquidity pool. It symbolizes the critical intersection of market microstructure and algorithmic trading, facilitating high-fidelity execution, precise price discovery, and optimal multi-leg spread strategies. This embodies a Principal's operational framework managing complex options trading, ensuring capital efficiency and mitigating systemic risk across a comprehensive Crypto Derivatives OS, delivering unparalleled alpha generation and best execution."
    },
    "keywords": [
        "Counterparty Risk",
        "Cross-Acceleration",
        "Cross-Default Clause",
        "Cross-Default Threshold",
        "Derivatives Contracts",
        "Financial Contagion",
        "Hedge Fund",
        "Hedge Fund Risk Management",
        "ISDA Master Agreement",
        "ISDA Schedule",
        "Master Agreement",
        "Net Asset Value",
        "Prime Brokerage",
        "Risk Management",
        "Specified Indebtedness",
        "Threshold Amount"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "FAQPage",
    "mainEntity": [
        {
            "@type": "Question",
            "name": "What Is The Strategic Value Of A Higher Threshold?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The strategic value lies in preserving operational continuity. A fund that is constantly at risk of tripping a low cross-default threshold is a fund that cannot take calculated risks. Every investment decision must be weighed against the possibility of triggering a systemic collapse. By negotiating a higher threshold, the fund liberates its portfolio managers to pursue alpha-generating strategies, confident that the core of the fund is protected. This is a profound competitive advantage. It allows the fund to allocate capital more efficiently and to engage in a wider range of investment activities than a competitor with a more fragile contractual architecture."
            }
        },
        {
            "@type": "Question",
            "name": "How Does A Fund Justify A Higher Threshold To A Dealer?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "A fund justifies a higher threshold by presenting a clear, data-driven case to the dealer. This involves showcasing the fund's robust internal risk controls, its low leverage, its diversified investment strategy, and its history of operational stability. The fund is essentially demonstrating that a low threshold is an inappropriate and inefficient risk mitigant for an institution of its quality. The negotiation becomes a discussion about calibrating the risk tool to the actual risk profile of the entity."
            }
        }
    ]
}
```


---

**Original URL:** https://options.greeks.live/question/how-does-a-higher-threshold-amount-in-a-cross-default-clause-benefit-a-hedge-fund/
