The “Repurchase Price” is the amount paid by the Seller to the Buyer on the “Repurchase Date”.  Any failure to do so constitutes an Event of Default for the purposes of the GMRA.  It is easiest to think of the “Repurchase Price” in terms of a loan transaction.  In these circumstances, the “Repurchase Price” would […]

The “Repurchase Date” is the date upon which the Buyer is required to sell “Equivalent Securities” back to the Seller with respect to any Repurchase Transaction executed under a GMRA.  More specifically, on the “Repurchase Date”: Failure to do either of the above constitutes an Event of Default for the purposes of the GMRA. It […]

In practice, “repricing” a transaction (whether that transaction is a Repurchase Transaction or a Buy/Sell Back Transaction) is an alternative to making a traditional margin call for a party with either “Transaction Exposure” (with respect to a single transaction) or “Net Exposure” (with respect to multiple transactions).  In practice, this method tends to be used […]

In simple terms, a “Replacement Transaction” is the transaction which exists AFTER it has been ‘adjusted’ pursuant to Paragraph 4(l) of the Global Master Repurchase Agreement. In practice, “adjustment” of a transaction (whether that transaction is a Repurchase Transaction or a Buy/Sell Back Transaction) is an alternative to making a traditional margin call for a […]

The term “Repo” is short for “Repurchase Transaction”. In a Repurchase Transaction, one party (called the “Seller”) sells an asset to another party (called the “Buyer”) for a price agreed between the two.  The asset being sold is usually a bond, although it can also be a share.  At the same time as the sale […]

“New Purchased Securities” are really just securities which have been substituted for the original “Purchased Securities” under Paragraph 8 (“Substitution”) of the GMRA. In other words, if you were to regard a Repurchase Transaction as economically equivalent to a loan, “New Purchased Securities” are really nothing more than substitute collateral provided in relation to the […]

The Global Master Repurchase Agreement is a framework document which allows counterparties to enter into multiple underlying Repurchase Transactions.  In relation to some of those Repurchase Transactions, a ‘first party’ may be purchasing securities from its counterparty whereas under other Repurchase Transactions, the counterparty may be purchasing securities from the ‘first party’.  As such, it […]

“Transaction Exposure” is calculated on a transaction-by-transaction basis.  However, it is quite possible (and indeed likely) that counterparties to a Global Master Repurchase Agreement will have executed multiple Repurchase Transactions between them.  Moreover, under some of those transactions, one party is likely to have “Transaction Exposure” towards its counterparty whereas, under other Repurchase Transactions, the […]

It has long been recognised that a party may have problems delivering a security if another market participant further down the chain fails to deliver.  This can be a particular problem in a market where there is a “short squeeze” (in other words, where there is a lack of availability of the security in general).  […]