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===A sensible approach?=== | ===A sensible approach?=== | ||
*'''Initiation''': A delivery failure by a {{gmraprov|Lender}} when initiating a repo has no consequence – it is neither an Event of Default, nor a breach of contract. Section {{gmraprov|10(g)}} allows the {{gmraprov|Buyer}} to terminate the repo at any time while the delivery failure is continuing ''or'' to work with the {{gmraprov|Seller}} to initiate the repo on a later date. | *'''Initiation''': A delivery failure by a {{gmraprov|Lender}} when initiating a repo has no consequence – it is neither an Event of Default, nor a breach of contract. Section {{gmraprov|10(g)}} allows the {{gmraprov|Buyer}} to terminate the repo at any time while the delivery failure is continuing ''or'' to work with the {{gmraprov|Seller}} to initiate the repo on a later date. | ||
*'''Scheduled maturity''': A redelivery failure by a | *'''Scheduled maturity''': A redelivery failure by a {{gmraprov|Borrower}} at term is not an {{gmraprov|Event of Default}}. Rather, the {{gmraprov|Lender}} may [[buy in]] the securities using section {{gmraprov|10(h)}}. | ||
*{{gmraprov| | *'''{{gmraprov|Collateral}} delivery failure''': A failure by either party to deliver {{gmraprov|collateral}} when required is an {{gmraprov|Event of Default}}. | ||
This correctly addresses the credit concerns that a party may justifiably have under a repo relationship, while also reflecting the intentions of the transacting parties when entering into repos. | This correctly addresses the credit concerns that a party may justifiably have under a repo relationship, while also reflecting the intentions of the transacting parties when entering into repos. |