The concept of a “Repricing Date” applies to “Repriced Transactions”.  By way of reminder, “Repriced Transactions” allow the parties to a transaction to extinguish “Transaction Exposure” by amending the cash leg of a transaction such that it ‘fits’ the available amount of ‘collateral’ (factoring in the collateral cushion agreed between the parties). If a transaction […]

A representation is a statement of fact or belief which one party makes to another before or at the time of entering into a contract. The 1995, 2000 and 2011 GMRAs are largely the same in terms of the representations that each of the parties make.  In all cases, representations are repeated on each day […]

In contrast to a bearer security, a record of ownership (in other words, a register) is maintained in relation to registered securities.  The register is the record of ownership and it is this that must be amended if ownership of the security is to be transferred to another party.  This safeguard makes registered securities much […]

The concept of “Receivable Securities” is relevant to the calculation of “Default Market Value” which forms part of the close-out mechanism under the GMRA. “Receivable Securities” are Equivalent Securities or Equivalent Margin Securities to be delivered to the Defaulting Party (i.e. to be delivered by the non-Defaulting Party). In simple terms, if a non-Defaulting Party […]

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 […]

The “Purchase Price” is the price at which the “Buyer” under a Repurchase Transaction buys the underlying securities (the “Purchased Securities”).  If a Repurchase Transaction were a loan, the “Purchase Price” would be the AMOUNT of the loan made by the Buyer to the Seller. It is important to remember that the “Purchase Price” has […]

The “Purchase Date” is no more than the date agreed between the parties on which the Buyer will purchase the “Purchased Securities” (at the “Purchase Price”) which are the subject of the Repurchase Transaction from the Seller. If a Repurchase Transaction were a loan, the “Purchase Date” would be the date on which the loan […]

The “Price Differential” is most easily understood if we consider a Repurchase Transaction to be economically equivalent to a collateralised loan.  In these circumstances, the “Price Differential” is the total AMOUNT OF INTEREST that has accrued with respect to the ‘loan’ made by the Buyer to the Seller. More specifically, the “Price Differential” on any […]

Payment netting is a method through which counterparties to a Repurchase Transaction executed under a Global Master Repurchase Agreement can mitigate counterparty credit risk. The concept of payment netting is found within Paragraph 6(h) of the 2011 GMRA.  It states that any amounts payable in the same currency and on the same date under ANY […]