Re: [soac-newgtldapsup-wg] continuity of operations funding requirement

[Richard Tindal <richardtindal@xxxxxx>]

The actual Q50 on page 107 provides a fairly detailed explanation of the 
Continuity Instrument.  The amount does have to be designated in US dollars but 
it doesn't have to be issued by a US bank: 

"The LOC must be issued by a reputable financial institution insured at the 
highest level in its jurisdiction. This may include a bank or insurance company 
with a strong international reputation that has a strong credit rating issued 
by a third party rating agency such as Standard & Poor’s (AA or above), Moody’s 
(Aa or above), or A.M. Best (A-X or above)."

I think the main point is that reducing the requirement from 3 years to, say, 2 
years would provide important cost savings to applicants while still protecting 
registrants.

RT



On Aug 12, 2010, at 9:49 AM, Eric Brunner-Williams wrote:

> Hi Richard,
> On 8/12/10 11:10 AM, Richard Tindal wrote:
> 
>> My understanding of the Financial Continuity Instrument is an amount
>> of cash, or an irrevocable cash instrument, which the registry places
>> under the control of ICANN.
> 
> The term is defined in the evaluation criteria, p94 of 312 in the 
> draft-rfp-clean-28may10-en.pdf, para 2, which reads:
> 
> "In the Continuity question in the financial section (see Question #50), up 
> to 3 points are awarded if an applicant provides, at the application stage, a 
> financial instrument that will guarantee ongoing registry operations in the 
> event of a business failure. This extra point can serve to guarantee passing 
> the financial criteria for applicants who score the minimum passing score for 
> each of the individual criteria. The purpose of this weighting is to reward 
> applicants who make early arrangements for the protection of registrants and 
> to accept relatively riskier business plans where registrants are protected."
> 
> What is being provided, and where, is not defined.
> 
> Assume an application by a cooperative located in Korea for an IDN string 
> related to agriculture and rural food marketing which creates
> a financial instrument denominated in KRW at the (Korean) National 
> Agricultural Cooperative Federation, NH Bank [1].
> 
> The proposed facilities-based registry operation is in Korea, and the 
> proposed operating costs, the costs that are the actual expense to be 
> continued by some instrument, are proposed to all be paid in KRW to Korean 
> accounts, individual (staff) and corporate (vendor).
> 
> I think it is difficult to conclude that the financial instrument only meets 
> the continuity purpose if it is in dollars in a bank in Los Angeles.
> 
> At p186 of 312 there is a prior to or concurrent with the execution of the 
> registry agreement reference, and the definition refers back to the quoted 
> text above, from p94.
> 
> At p200 there is "... Registry Operator ... has duly executed and delivered 
> to ICANN an instrument that secures the funds required to perform registry 
> functions for the TLD in the event of the termination or expiration ..." Here 
> the language addresses the instrument, what the currency instrumentalized is, 
> and what institution the instrument is drawn upon, is undefined.
> 
> That's all we know from draft-rfp-clean-28may10-en.pdf.
> 
> Eric
> 
> [1] http://www.nonghyup.com/Main/main.aspx