Interpretation (Agency Addendum) - GMSLA Provision

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In a Nutshell™ Clause Interpretation (Agency Addendum):

Addendum 2. Interpretation (Agency Addendum)
2.1 In this addendum:

(a) Collateral Transfer is defined in paragraph Addendum 5.1 below;

(b) Net Loan Exposure:

(i) If the aggregate Market Value of Posted Collateral between the Borrower and any one Principal exceeds the total Required Collateral Value for all Agency Loans between them, Borrower has a Net Loan Exposure to that Principal equal to that excess.

(ii)If it is less than the Required Collateral Value, the Principal has a Net Loan Exposure to Borrower equal to the shortfall.

(c) Pooled Principal is defined in paragraph Addendum 6(a) below; and

(d) Pooled Loan is defined in paragraph Addendum 6(a) below.

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2010 GMSLA full text of Clause Interpretation (Agency Addendum):

2. Interpretation (Agency Addendum)
2.1 In this addendum:

(a) Collateral Transfer has the meaning given in paragraph 5.1 below;

(b) if at any time on any Business Day the aggregate Market Value of Posted Collateral in respect of all Agency Loans outstanding with a Principal under the Agreement exceeds the aggregate of the Required Collateral Value in respect of such Agency Loans, Borrower has a Net Loan Exposure to that Principal equal to that excess; if at any time on any Business Day the aggregate Market Value of Posted Collateral in respect of all Agency Loans outstanding under the Agreement with a Principal falls below the aggregate of the Required Collateral Value in respect of such Agency Loans, that Principal has a Net Loan Exposure to Borrower for such Agency Loans equal to that deficiency;

(c) Pooled Principal has the meaning given in paragraph 6(a) below; and

(d) Pooled Loan has the meaning given in paragraph 6(a) below.

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A scholar will note that the most of this interpretation section is surplus to requirements, since it merely fingerpost to other parts of the Addendum. Which leaves the vexed question of (b). This is the definition of Net Loan Exposure. This is designed to capture the overall exposure as between the Borrower and any one Principal in the Agent Lender’s portfolio, across all Loans between those two.

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In a Nutshell™ Clause Net Loan Exposure: