The “Repurchase Date” is the date upon which the Buyer is required to sell “Equivalent Securities” back to the Seller with respect to any Repurchase Transaction executed under a GMRA. More specifically, on the “Repurchase Date”:
- The Buyer transfers to the Seller (or its agent) “Equivalent Securities”; and
- The Seller pays to the Buyer the “Repurchase Price” (less any amount which the Buyer hadn’t paid over to the Seller with respect to income and dividends received on the collateral whilst it was held by the Buyer).
Failure to do either of the above constitutes an Event of Default for the purposes of the GMRA.
It is important to remember that the obligation of the Buyer is to sell “Equivalent Securities”. The Buyer is not obliged to return the ACTUAL securities which it originally purchased from the Seller. The reason for this is easy to understand if we consider the concept of FUNGIBILITY. If assets are fungible with one another, we should be agnostic as to whether or not we get the EXACT asset back. If it is “equivalent”, that should be sufficient.
From an economic point of view, if a Repurchase Transaction was considered to be identical to a loan, the “Repurchase Date” is best thought of as the date on which the ‘loan plus interest’ is to be repaid by the “Seller” (in other words, the borrower) and the ‘collateral’ returned by the “Buyer” (in other words, the lender). In other words, it would be the maturity date of the loan.
If an Early Termination Date occurs under the GMRA (because a Default Notice has been served following the occurrence of an Event of Default), the Repurchase Date is deemed to have occurred on that date.Contact Us