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Purchased Securities

The “Purchased Securities” are simply the underlying securities which the Seller sells to the Buyer under a Repurchase Transaction, as described in the confirmation for the underlying transaction.  In other words, they are the securities which underlie the original trade.  That sale takes place on the “Purchase Date” against payment of the “Purchase Price”. 

The basic position under the 2011 GMRA is that the transfer of the “Purchased Securities” and the payment of the “Purchase Price” should happen simultaneously (see paragraph 6(c)).  Any failure to deliver “Purchased Securities” on the “Purchase Date” constitutes an Event of Default under the GMRA (but also benefits from the “mini close-out”.

In simple terms, if a Repurchase Transaction were a loan, the “Purchased Securities” would be the securities which the Seller transfers to the Buyer in order to collateralise the ‘loan’.

“Purchased Securities” can be substituted under the GMRA (with the agreement of the parties).  Any securities which are provided by the Seller in substitution for “Purchased Securities” are known as “New Purchased Securities”.

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