Interest on Cash Margin - GMRA Provision

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GMRA Anatomy™


In a Nutshell Clause 4(f):

4(f) Indebtedness: A payment of Cash Margin creates indebtedness from the recipient to the payer. It will bear interest as specified in Annex I.
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Global Master Repurchase Agreement full text of Clause 4(f):

4(f) A payment of Cash Margin shall give rise to a debt owing from the party receiving such payment to the party making such payment. Such debt shall bear interest at such rate, payable at such times, as may be specified in Annex I hereto in respect of the relevant currency or otherwise agreed between the parties, and shall be repayable subject to the terms of this Agreement.
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Resources: 2010 GMRA: Full wikitext · Nutshell wikitext
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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

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Note the difference here between Interest on Cash Margin under Clause 4(f) — set out in the Annex, and for those counterparties with alert legal eagles, likely to be SONIA (for sterling), EONIA (for euro) and Fed Funds Effective (for dollars), i.e. no longer that ghastly pariah LIBOR — and default interest under Clause 10(f), which is hard-coded to be LIBOR.

Is that a huge problem? In the scheme of things probably not.

DID SOMEONE SAY LIBOR??

Mention of LIBOR requires obligatory mention of the Dramatic look gopher, of course. here you go.

See also