The FSA's supervisory guidelines call early termination at the client's request "mid-term cancellation" (chūto kaiyaku). Some trades cannot, in principle, be cancelled mid-term, and cancelling a trade may give rise to a termination payment. In trades with a bank, an event under the bank transaction agreement or similar documents can cause the client to lose the benefit of time (the right not to repay before the due date). The client may then also lose the benefit of time under the derivatives trade and become obliged to pay a termination payment1.

Some sources call early termination caused by an event set out in the contract "kigenmae shūryō." How the trades are settled is set by the contract2.

Notes

  1. Financial Services Agency, "主要行等向けの総合的な監督指針" (Comprehensive Guidelines for Supervision of Major Banks, etc.) (October 2026), III-3-3-1-2(2)①イ, item b (pages 217–218) (in Japanese). ↩

  2. 全国銀行協会 金融法務研究会 (financial law study group of the Japanese Bankers Association), "デリバティブ取引に係る諸問題と金融規制の在り方" (Issues in derivatives transactions and the approach to financial regulation) (March 2018), Chapter 2 (神田秀樹), "６　店頭デリバティブ取引におけるネッティング後の損害の額の算定（東京高判平成25年4月17日判例時報2250号14頁）" (6. Calculating the amount of loss after netting in OTC derivatives transactions (Tokyo High Court judgment of April 17, 2013)), pages 32–36 (in Japanese). ↩