Termination of this Agreement - GMSLA Provision

GMSLA Anatomy™ A Jolly Contrarian owner’s manual™ Go premium Overview — Summary — Premium — See also — Wikitext Crosscheck: Template:Go gmsla Termination in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. Original text 16. Termination of this Agreement Each Party shall have the right to terminate this Agreement by giving not less than 15 Business Days’ notice in writing to the other Party (which notice shall specify the date of termination) subject to an obligation to ensure that all Loans which have been entered into but not discharged at the time such notice is given are duly discharged in accordance with this Agreement. The Varieties of Stock Lending Experience Subject 2010 GMSLA 2018 Pledge GMSLA 1995 OSLA Applicability/Preamble 1 1 Preamble Interpretation 2 2 1 Definitions 2.1 2.1 1 Loans of Securities 3 3 2 Delivery 4 4 3 Collateral 5 5 6 Distributions and Corporate Actions 6 6 4 (“Rights and Title”) Rates for Loans and Collateral 7 7 4 Delivery of Equivalent Securities 8 8 7 Failure to Deliver 9 9 N/A Events of Default 10 10 12 Consequences of Events of Default 11 11 8 (“Set-off”) Taxation 12 12 9 Lender's Warranties 13 13 10 Borrower's Warranties 14 14 11 Interest on Outstanding Payments 15 15 13 Termination of Agreement 16 16 15 Single Agreement 17 17 N/A Severance 18 18 18 Specific Performance 19 19 19 Notices 20 20 20 Assignment 21 21 21 Non-Waiver 22 21 22 Governing Law and Jurisdiction 23 23 26 Time 24 24 24 Recording 25 25 25 Waiver of Immunity 26 26 N/A Expenses N/A 27 N/A Miscellaneous 27 28 N/A Resources and Navigation Navigation 2010 GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · Schedule · Agency Annex · Addendum for Pooled Principal Agency Loans 2018 Pledge GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · 28 · Schedule · Agency Annex Stock Loan owner’s manuals: 2010 GMSLA · 2000 GMSLA · Pledge GMSLA · OSLA Index: Click ᐅ to expand: GMSLA Pledge GMSLA

Comparisons

Pledge GMSLA

First, curiously, the 2018 Pledge GMSLA inserts the right to terminate the entry into of further Loans under this Agreement — a genuine “WTF” moment there, since there is no obligation to enter into any Loan at any time that you don’t want to anyway — and the second is to add a chicken-lickenish statement of the bleeding obvious that if one terminates the Agreement that doesn’t whip away the rug from under your carefully constructed the security arrangements — at least not until you’ve sorted out the outstanding Loans and returned whatever you have borrowed.

ISDA

By way of further comparison, the ISDA Master Agreement doesn’t have a general termination right of this sort at all. You can only terminate Transactions, not the master agreement construct which sits around them itself. It is an immortal husk.

Basics

For reasons we get into more detail about in the premium section (see why termination on notice is useful) there is something to be said for being able to terminate on notice something the ISDA Master Agreement does not contemplate). While it does not affect any outstanding Loan, seeing as Loans are, if not outright callable, usually short-dated and preternaturally re-marked to market, outstanding Loans are not an enormous barrier to sweeping the whole arrangement away.

Course of dealings

What on earth, you might muse, is a “course of dealing”? According to BusinessDictionary.com, it is “a pattern of normal business conduct between two parties. It is established over a period involving several transactions, and may be used as a reliable indicator of how they intend to deal in the future.”

In any weather, it adds nothing but heft to this clause. This is a standard termination on notice clause for the 1995 OSLA itself, but doesn’t cut across the terms — and in particular, any stipulated term for any loan, which will be set out in a Borrowing Request They made a much better fist of it in the GMSLA.

So before you can use this clause, you must validly terminate each loan under the terms of its Borrowing Request.

Grand guignol, ISDA style

The ISDA’s hesitance on this unimportant topic, we venture, is to do with paranoid fears about the efficacy of its sainted close-out netting terms — meh; maybe — but we like to think it has unleashed on the world an army of wight-walker zombie ISDAs, doomed to roam the earth until the day of judgment, apropos nothing but there, undead, and ready to animate and rally to the banner of Sauron, Beelzebub, Lehman Brothers etc., should they be reincarnated, to rain apocalyptic hell on the armies of men. We have written a whole article about it.

Premium content Here the free bit runs out. Subscribers click 👉 here. New readers sign up 👉 here and, for ½ a weekly 🍺 go full ninja about all these juicy topics👇 JC’s “nutshell” summary of the clause Background reading and long-form essays Why termination on notice is useful

See also

• Undead ISDA
• Anti-money laundering