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Within the context of transactions executed pursuant to a GMRA, “Termination” refers to the requirement for the Buyer to ‘return’ Equivalent Securities against repayment of the Repurchase Price by the Seller. In simple terms, as the name suggests, it is just the ‘bringing to an end’ of a transaction.
In general, Repurchase Transactions can be “fixed term” or “terminable upon demand”. In the case of fixed-term Repurchase Transactions, the transaction will come to an end on the date on which it was agreed that the transaction should come to an end. If a Repurchase Transaction is terminable on demand, the transaction will come to an end on the date specified for termination within the relevant demand. Where a transaction is terminable on demand, it is normally the case that EITHER PARTY can terminate the transaction by serving a demand to do so. Beyond this, termination demand can be made by telephone or any other method, but the termination can only occur after expiration of “the minimum period as is customarily required for the settlement or delivery of money or Equivalent Securities of the relevant kind”. This will allow both parties to get hold of the cash necessary to repay the ‘loan’ (in the case of the Seller) or get hold of Equivalent Securities necessary to return the ‘collateral for the loan’ (in the case of the Buyer).Contact Us