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Equivalent Margin Securities
The concept of “Equivalent Margin Securities” must not be confused with the concept of “Equivalent Securities”, although both rest on the concept of “equivalence” (otherwise known as ‘fungibility’ – the ability of a good or asset to be interchanged with other individual goods or assets of the same type). The definition of “Equivalent Securities” refers […]
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Putting the TIGER to sleep – ISDA’s proposal for putting intragroup margin exemptions on a permanent footing
ISDA have published a letter from their CEO to HM Treasury, the FCA, and the Bank of England proposing to reform aspects of UK EMIR that touch upon intragroup exemptions. The letter, sent in December 2022, was published on 5th January 2023. ISDA’s intervention has been triggered by the lack of content touching upon EMIR […]
Default Notice
The main difference between, on the one hand the 1995 and 2000 GMRAs and, on the other hand, the 2011 GMRA insofar as they relate to “Events of Default” lies in the way in which the concept of the “Default Notice” is used. Under the 1995 and 2000 GMRAs, the delivery of a “Default Notice” […]
Default Market Value
Whilst the definition of “Market Value” is used for the purposes of calculating the value of securities under the margin maintenance provisions, a different concept is used to value collateral on a close-out. This is the concept of “Default Market Value”. If we take a step back, it makes sense to use ‘just the normal’ […]
Close-out netting
Close-out netting is a process which takes place following the termination of transactions. In summary, all transactions where a party owes its counterparty money are set-off against those transactions where the counterparty owes the first party money in order to produce a single, net, sum. The purpose is to reduce credit risk as well as […]
GMRA A-Z: Default Market Value
Whilst the definition of “Market Value” is used for the purposes of calculating the value of securities under the margin maintenance provisions, a different concept is used to value collateral on a close-out. This is the concept of “Default Market Value”. If we take a step back, it makes sense to use ‘just the normal’ […]
GMRA A-Z: Contractual Currency
At a high level, the “Contractual Currency” is the currency in which the “Purchase Price” and the “Repurchase Price” (but not a close-out amount) is denominated. In addition, the concept of the “Contractual Currency” is also used in the definition of “Market Value”. As such, calculations of the value of Purchased Securities are converted into […]
GMRA: A-Z Confirmation
In simple terms, a “Confirmation” is a document which records the economic terms of a specific Repurchase Transaction entered into under a Global Master Repurchase Agreement. Confirmations must be in writing and should provide certain basic information regarding the underlying Repurchase Transaction, including: A description of the “Purchased Securities” (in other words, the collateral which […]
Decimated LIBOR zombies stagger on
On the 23 November 2022, the FCA announced a significant extension for 3m GBP synthetic LIBOR and proposed the publication of synthetic USD LIBOR settings until 30 September 2024. The Regulator will employ its powers under the UK Benchmarks Regulation to compel ICE Benchmark Administration to publish 3m synthetic LIBOR until 31 March 2024. The […]
GMRA A-Z: Close-out netting
Close-out netting is a process which takes place following the termination of transactions. In summary, all transactions where a party owes its counterparty money are set-off against those transactions where the counterparty owes the first party money in order to produce a single, net, sum. The purpose is to reduce credit risk as well as […]