Template:M gen GMSLA 10

10.1(a): Failure to pay or deliver: There are great tales of worthy fellows around the market trying to tweak this provision because, by apparent oversight, it doesn't capture a failure to return Equivalent (non cash) Collateral.

But this is not an accident, for the same reason a failure to redeliver Equivalent Securities isn’t an Event of Default. Indeed, it is a plainly deliberate omission. The drafters were careful to capture the payment or repayment of cash, and deliveries and further deliveries of Collateral, but not the return of Equivalent Collateral.

A counterparty may have on-lent, or on-collateralised, with non-cash Collateral it has been posted. It may have exactly the same difficulties in getting hold of it to redeliver as a borrower may in getting hold of Equivalent Securities. So the remedy is to withhold the return of securities, buy in and mini close-out under 9.2 which gives the aggrieved party equivalent rights, but not the right to close out the whole agreement (until there’s a failure of the mini-close out settlement amount itself).
10.1(b):
10.1(c):
10.1(d):
10.1(e): Breach of warranty: Why exclude the 14(e) warranty about not having the primary purpose of voting on the Securities? Search me.
10.1(f):
10.1(g):
10.1(h):
10.1(i):