Template:M summ GMSLA 11.7

This is the Default Interest provision of the 2010 GMSLA. Note a potentially troublesome reference to LIBOR in there, seeing as LIBOR is being phased out, though it is only a fall back, and only for Default Interest on its legal fees (once a party has failed to meet its payment obligations) so, while there are more cataclysmic threats to the capital markets than this, that won’t stop financial services firms across the western world diverting key internal risk management resource towards remediating it, generating 18 months’ meaningful employment for an army of contractors of course.

Note:

• This only captures interest on professional expenses incurred in closing out a 2010 GMSLA. It corresponds to Clause 10(f) of the Global Master Repurchase Agreement, which is written in similar terms.
• This would not capture a “mini close-out” under 9.1(b) or 9.2(b) as a result of a settlement fail under normal market procedures. These are treated as if they were Events of Default, but they are deemed not to be Events of Default. For those you pay the innocent party’s actual interest costs, not its theoretical ones, so there is no need to refer to a benchmark.