The concept of the “Early Termination Date” was first introduced into the 2011 GMRA.  Following the occurrence of an Event of Default, the non-Defaulting Party designates an “Early Termination Date” within its “Default Notice” (Automatic Early Termination can also apply).  In essence, this has been designed to ensure that the close-out mechanics of the 2011 […]

“Distributions” are payments that are made with respect to securities.  They can include interest, dividends and repayment of principal amounts.  Obviously, the “Distributions” are paid to the party which owns the securities at the time that the relevant payment is made. “Distributions” are most relevant to the “Income” provisions of the GMRA under which, broadly, […]

Paragraph 1(a) of the Global Master Repurchase Agreement states that parties may enter into transactions through their “Designated Offices”.  There is no real definition of “Designated Office” within the GMRA.  Both the Buyer and the Seller simply specify their “Designated Office(s)” within Part 1(f) of Annex I to the 2011 GMRA (Part 1(e) to Annex […]

“Deliverable Securities” are Equivalent Securities or Equivalent Margin Securities which are to be delivered by the Defaulting Party.  In other words, “Deliverable Securities” are securities that are to be returned to the non-Defaulting Party (but which haven’t been returned due to the default of the Defaulting Party).  It is probably easiest to think of “Deliverable […]

The “Defaulting Party” in relation to a GMRA is the party in relation to which an Event of Default has arisen.  More specifically, in terms of the GMRA: “Default Notices” are served on a Defaulting Party. The “Spot Rate” used for performing any currency conversions is selected by the non-Defaulting Party rather than the Defaulting […]

Credit risk is risk faced by a lender.  More specifically, it is the risk that arises by virtue of the failure of a borrower to repay a loan or otherwise to meet its contractual obligations.

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 […]