Within the context of transactions executed pursuant to a GMRA, “Termination” refers to the requirement for the Buyer to ‘return’ Equivalent Securities against repayment of the Repurchase Price by the Seller.  In simple terms, as the name suggests, it is just the ‘bringing to an end’ of a transaction. In general, Repurchase Transactions can be […]

The “Term” of a Repurchase Transaction is the period of time between the “Purchase Date” and the “Repurchase Date”.  In simple terms, it is the time for which the Repurchase Transaction remains outstanding.

TARGET2 is a real-time gross settlement (RTGS) system used by central banks and commercial banks in order to make payments in Euro. In simple terms, TARGET 2 works as follows: Bank A and Bank B both have accounts with a central bank. A payment in Euro is to be made from Bank A to Bank […]

The “Spot Rate” is the rate used for all conversions to be performed under the GMRA (including for margining purposes and for close-out calculations).  The 1995 and 2000 GMRAs both use the spot rate quoted by Barclays Bank PLC as a default.  The 2000 GMRA documents two alternatives: For the purposes of Paragraph 10 (Events […]

The “Single Agreement” provision of the 2011 GMRA (Paragraph 13) is primarily an attempt to protect Repurchase Transactions entered into under the GMRA against the risk of ‘cherrypicking’ (in other words, an attempt by a liquidator to repudiate transactions which are not profitable to the estate of the bankrupt entity which it is representing whilst, […]

A “security” is a financial instrument that holds some kind of monetary value.  Securities can take the form of debt securities (called “bonds”) or equity securities (in other words, shares).  In a debt context, securities are really just I.O.U.’s.  In other words, the security represents money that has been borrowed (and therefore must be repaid). […]

The concept of a “Repricing Date” applies to “Repriced Transactions”.  By way of reminder, “Repriced Transactions” allow the parties to a transaction to extinguish “Transaction Exposure” by amending the cash leg of a transaction such that it ‘fits’ the available amount of ‘collateral’ (factoring in the collateral cushion agreed between the parties). If a transaction […]

A representation is a statement of fact or belief which one party makes to another before or at the time of entering into a contract. The 1995, 2000 and 2011 GMRAs are largely the same in terms of the representations that each of the parties make.  In all cases, representations are repeated on each day […]

In contrast to a bearer security, a record of ownership (in other words, a register) is maintained in relation to registered securities.  The register is the record of ownership and it is this that must be amended if ownership of the security is to be transferred to another party.  This safeguard makes registered securities much […]