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| {{gmslaanat|8.6}} | | {{gmslaanat|8.6}} |
| This provision allows a Counterparty to suspend payments or deliveries pending satisfactory arrangements where it is concerned as to the creditworthiness of its counterparty. It is a half-arsed version of the {{isdama}}’s feted Section {{isdaprov|2(a)(iii)}}.
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| Otherwise a creditworthy {{gmslaprov|Borrower}} would be obliged to redeliver {{gmslaprov|Equivalent}} {{gmslaprov|Securities}} to a bankrupt {{gmslaprov|Lender}} even though it did not expect to receive its {{gmslaprov|Equivalent}} {{gmslaprov|Collateral}} back, which would prejudice its ability to effect a {{gmslaprov|mini close-out}} and set off its obligation to deliver {{gmslaprov|Equivalent}} {{gmslaprov|Securities}} against that {{gmslaprov|Collateral}} return.
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| It's kind of weird, loosey goosey language:
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| :“If I think you're bust and I don't want to pay, I don't have to, unless I couldn't pay or didn't want to pay, in which case I have to pay.”
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| Consult the circular logicians to pick your way out of that one.
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| {{sa}} | | {{sa}} |
| *[[Flawed asset]] | | *[[Flawed asset]] |
| *Section {{isdaprov|2(a)(iii)}} of the {{isdama}} | | *Section {{isdaprov|2(a)(iii)}} of the {{isdama}} |
Revision as of 14:44, 7 July 2020
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GMSLA Anatomy™
In a Nutshell™ Clause 8.6:
8.6 Delivery obligations to be reciprocal: Neither Party has to pay or deliver anything unless it is satisfied that the other Party will make the corresponding payment or delivery to it. If it is not, as long as it is willing and able to perform its own obligations it may, by notice to the other Party, withhold delivery or payment until the other Party has made sufficient arrangements to assure full delivery or payment.
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2010 GMSLA full text of Clause 8.6:
8.6 Delivery obligations to be reciprocal
Neither Party shall be obliged to make delivery (or make a payment as the case may be) to the other unless it is satisfied that the other Party will make such delivery (or make an appropriate payment as the case may be) to it. If it is not so satisfied (whether because an Event of Default has occurred in respect of the other Party or otherwise) it shall notify the other Party and unless that other Party has made arrangements which are sufficient to assure full delivery (or the appropriate payment as the case may be) to the notifying Party, the notifying Party shall (provided it is itself in a position, and willing, to perform its own obligations) be entitled to withhold delivery (or payment, as the case may be) to the other Party until such arrangements to assure full delivery (or the appropriate payment as the case may be) are made.
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See also