(20)The right of the originator, as protection buyer, to receive timely payments on actual losses, should be adequately protected. Accordingly, the transaction documentation should provide for a sound and transparent settlement process for the determination of actual losses in the reference portfolio, to prevent the originator from being underpaid. As working out the losses might be a lengthy process and to ensure timely payments to the originator, interim payments should be made at the latest six months after a credit event has occurred. Furthermore, there should be a final adjustment mechanism to ensure that interim payments cover actual losses and to prevent those interim losses from overpaying, which would be to the detriment of investors. The loss settlement mechanism should also clearly specify the maximum extension period that should apply to the workout process for those exposures and such extension period should be no longer than two years. That loss settlement mechanism should ensure the effectiveness of the credit protection agreement from the originator’s perspective, and give investors legal certainty on the termination date of their obligation to make payments, and therefore contribute to a well-functioning market.