6(j) - GMRA Provision

2000 Global Master Repurchase Agreement A Jolly Contrarian owner’s manual™ Resources and navigation Resources: 2010 GMRA: Full wikitext · Nutshell wikitext Navigation 2000 GMRA Table of Contents · 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · Schedule · Equities Annex: EA 1 · EA 2 · EA 3 · EA 4 · EA 5 · Buy/Sellback Annex · BSA 1 · BSA 2 · BSA 3 · BSA 4 · BNA 5 Index: Click ᐅ to expand: GMRA Clause 6(j) in a Nutshell™ Use at your own risk, campers! 6(j) Where paragraph 6(j) applies, it will be a condition precedent to each party’s obligations under this Agreement (other than those under paragraph 10) that the other party is not suffering any ongoing Events of Default. view template Full text of Clause 6(j) 6(j) If the parties have specified in Annex I hereto that this paragraph 6(j) shall apply, each obligation of a party under this Agreement (other than an obligation arising under paragraph 10) is subject to the condition precedent that none of those events specified in paragraph 10(a) which are identified in Annex I hereto for the purposes of this paragraph 6(j) (being events which, upon the serving of a Default Notice, would be an Event of Default with respect to the other party) shall have occurred and be continuing with respect to the other party. view template Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Content and comparisons

Oddly — actually, come to think of it, not oddly, but sensibly — the otherwise quite comparable 2010 GMSLA doesn’t have a flawed asset provision like the Global Master Repurchase Agreement’s Clause 6(j) (the closest it gets is Paragraph 8.6), even though in most every other respect, it’s very similar to the Global Master Repurchase Agreement.

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Summary

Clause 6(j) is the Global Master Repurchase Agreement's version of the ISDA Master Agreement’s Section 2(a)(iii): it is a flawed asset provision, though in an agreement without any particular need for one. Unlike the ISDA’s version, it's toggle-able, suggesting the framers of the Global Master Repurchase Agreement were somewhat embarrassed to include it. Rightly, because a flawed asset clause doesn’t make a colossal amount of sense in an intrinsically margined, callable transactions like a repo agreement.

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General discussion

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See also

• The flawed asset concept generally
• Section 2(a)(iii) of the ISDA Master Agreement: where all this nonsense started.

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