Normally, under Paragraph 10(b) of the 2011 GMRA, if an Event of Default has occurred and is continuing, then the non-Defaulting Party may (by sending a notice to its counterparty) designate a day as an Early Termination Date in respect of all outstanding Transactions.  This has the effect of bringing forward the Repurchase Date with […]

The concept of an “Adjustment Date” is relevant to the ‘transaction adjustment’ methodology described under Paragraph 4(l) the GMRA whereby an “Original Transaction” is ‘adjusted’ on the “Adjustment Date” with the result that it is terminated and replaced by a “Replacement Transaction”.  At a high level, the adjustment process is an alternative to making a […]

The concept of “Transactions Costs” is relevant when calculating “Default Market Value” for the purposes of close-out under the GMRA. “Transaction Costs” are simply reasonable costs, commission, fees and expenses incurred in connect with the purchase of Deliverable Securities or the sale of Receivable Securities.

Paragraph 6(g) of the 2011 GMRA states that “Time shall be of the essence in this Agreement”.  The effect of making ‘time of the essence’ depends on whether contractual rights or contractual obligations are being considered. If time is of the essence for exercising a contractual right, then the right is generally lost if not […]

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 […]

The “Term” of a Repurchase Transaction is the period of time between the “Purchase Date” and the “Repurchase Date”.  In simple terms, it is the time for which the Repurchase Transaction remains outstanding.

TARGET2 is a real-time gross settlement (RTGS) system used by central banks and commercial banks in order to make payments in Euro. In simple terms, TARGET 2 works as follows: Bank A and Bank B both have accounts with a central bank. A payment in Euro is to be made from Bank A to Bank […]

The “Spot Rate” is the rate used for all conversions to be performed under the GMRA (including for margining purposes and for close-out calculations).  The 1995 and 2000 GMRAs both use the spot rate quoted by Barclays Bank PLC as a default.  The 2000 GMRA documents two alternatives: For the purposes of Paragraph 10 (Events […]

The “Single Agreement” provision of the 2011 GMRA (Paragraph 13) is primarily an attempt to protect Repurchase Transactions entered into under the GMRA against the risk of ‘cherrypicking’ (in other words, an attempt by a liquidator to repudiate transactions which are not profitable to the estate of the bankrupt entity which it is representing whilst, […]