“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 Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11 Summary This contract law case is steeped in international geopolitics, with direct ties to the 2014 revolution that overturned the government of Viktor Yanukovych, and to the current Russian invasion of Ukraine. Law Debenture Trust applied for summary judgment. The UK Supreme Court rejected […]

ISDA is in the process of responding to a request for comments on the SEC’s proposed “Safeguarding Rule for Investment Advisers (the “Safeguarding Rule”). The regulator seeks to amend the 60 years old Rule 206(4)-2 of the Advisers Act 1940, redesignating it as a new rule 223-1 under the same Act (the “Custody Rule”). Aimed […]

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 […]

Lehman Brothers International (Europe) (in administration) v Assured Guaranty Financial Products Inc. (2023), Index No. 653285/2011 Summary This case now holds the record as the longest-running case to come out of the 2008 Lehman Brothers collapse, having entered the legal system in 2011. It was heard in the Commercial Division of the Supreme Court of […]

Fenchurch Advisory Partners LLP v AA Ltd [2023] EWHC 108 (Comm) Summary This High Court case centred on a dispute over whether a contract was validly formed despite the lack of signed engagement letter. Its significance lies in confirming basic points of law regarding contract formation. Judgment in this case was handed down on 24 […]

“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).  […]

The definition of “Market Value” is used for the purposes of calculating the value of securities under the GMRA.  As such, it plays a key role in the margin maintenance, transaction repricing, transaction adjustment and substitution provisions.  As a concept, it also lies at the heart of key definitions such as the “Margin Ratio”, “Net […]