In broad terms, a condition precedent is a condition that must be satisfied before a legal right, claim, duty or interest can arise. Conditions precedent exist within the GMRA.  Specifically, Paragraph 6(j) of the 2011 GMRA states that, if the parties have specified in Annex I that paragraph 6(j) applies, each obligation of a party […]

The concept of a “Competent Authority” is relevant in two circumstances: The definition of “Act of Insolvency”.  An “Act of Insolvency” includes the ‘commencement of any bankruptcy/winding-up/insolvency proceeding by any “Competent Authority” ’.  In turn, the “Act of Insolvency” definition feeds into the Event of Default found within Paragraph 10(a)(vi) of the GMRA; and The […]

Economically, Repurchase Transactions and Buy/Sell Back Transactions are pretty much identical. Historically, it was possible to distinguish Buy/Sell Backs from Repurchase Transactions on the basis that Buy/Sell Backs were UNDOCUMENTED transactions whereas Repurchase Transactions were DOCUMENTED.  However, given that Buy/Sell Backs can be transacted under the Global Master Repurchase Agreement, this distinction does not really […]

There are 3 definitions of “Business Day” under the 2011 GMRA. In relation to the settlement of a Transaction or delivery of Securities under the GMRA through a settlement system – a day on which that settlement system is open for business. In relation to the settlement of a Transaction or delivery of Securities under […]

A bearer security is one that is NOT registered in the books and records of the issuing entity.  Because there are no records of ownership, possession of the security is the sole evidence of ownership.  Put another way, whoever holds the security is regarded as being its owner. The 1988 movie “Die Hard” perfectly demonstrates […]

The definition of “Appropriate Market” is used in calculating the “Default Market Value” of securities on a close-out under a GMRA.  As the name suggest, the “Appropriate Market” is simply the most appropriate market for the securities in question, as determined by the non-Defaulting Party.  More specifically, as part of the close-out process under the […]

In simple terms, the “Applicable Rate” is just an interest rate which is applied to amounts which are due between the parties to a Global Master Repurchase Agreement, but which remain unpaid. More specifically, if any amount payable under the 2011 GMRA or any Transaction is not paid when due, interest shall accrue on that […]

An “Agency Transaction” is one in which a third party is given authority (whether express or implied) to enter into a transaction under the Global Master Repurchase Agreement on behalf of a “Principal”.  The most typical practical example of an “Agency Transaction” arises where an investment manager enters into a GMRA and Repurchase Transactions on […]

The concept of the “Base Currency” is used for the following purposes: It is quite normal to specify a different Base Currency for each of the above purposes. This is done in Annex I to the GMRA.  Often, you will see the Base Currency election as being the home currency of the Defaulting Party.  The […]