Template:M summ GMRA 6

Paragraph 6(a)

Nothing really to see here: payments must be unencumbered, and in these days of real-time electronic settlement, Clearing Systems and the like, it is quite hard not to transfer things unencumbered: it is a basic condition of eligibility to clearing systems for securities, and currencies, by definition, are unencumbered (there is an essay on this subject on our cash page), and while they may not freely transferable, that will be a function of central bank regulations for the currency in question, or international sanctions and so on, and not really within the gift of the transferor to do much about.

Paragraph 6(b)

Your standard tax gross-up clause. No fiddly “Indemnifiable Tax” exceptions, as there are in the ISDA Master Agreement. The theory of the game here: any withholding obligation imposed on a payer or deliverer is that party’s problem — they chose to situate their office in Weston-super-Mare, so they should take hte tax consequences of that.

Paragraph 6(c)

Everything is DVP. This ought not come as a surprise in our digital age, but there may be certain asset classes where this is not possible — especially if you are using your Global Master Repurchase Agreement to muck around with commodities and things like that — and some currency situations (like Roubles) where for various reasons counterparties might like to be prefunded.

Paragraph 6(d)

Some proper “thanks for writing in, fellas” moments here for ICMA’s crack drafting squad™. Like paragraph 6(d), which bestows on the contractual counterparties the unilateral right to waive their own contractual rights — gee whizz, I never — and which is peppered cryptically throughout the rest of the document “, subject to paragraph 6(d)” — leading unsuspecting readers to believe this mysterious paragraph 6(d) must actually do something more consequential rather than stating the bleeding obvious.

To give ICMA’s crack drafting squad™ a little credit, they were signposting that things can get hairy and choppy in the securities markets (and currency markets) and the idea of the Global Master Repurchase Agreement is that people act as good eggs and don’t stand on ceremony. So if you can’t SDVP for infrastructural or geopolitical reasons — any reasons bar your own credit implosion — you ought not to be a dick about it. This clause doesn’t stop you being a dick about it — but it is a counsel of prudence all the same. Template:M summ GMRA 6(e) Template:M summ GMRA 6(f) Template:M summ GMRA 6(h) Template:M summ GMRA 6(i) Template:M summ GMRA 6(j)