Applicability - GMRA Provision

GMRA Anatomy™ →Go uptown In a Nutshell™ Clause 1: 1(a) The parties acting through their Designated Offices, may enter into Transactions in which: a “Seller” agrees to sell securities and financial instruments (“Securities”) to a “Buyer” (subject to paragraph 1(c), other than equities and Net Paying Securities) against the payment of the purchase price by Buyer to Seller, and simultaneously Buyer agrees to sell equivalent Securities back to Seller on a certain date (or on demand) against the payment of the repurchase price by Seller to Buyer. 1(b) “Transactions” may be “Repurchase Transactions” or “Buy/Sell Back Transactions” and will be governed by this Agreement and Annex I. Template:Nutshell GMRA 1(c) Template:Nutshell GMRA 1(d) view template Global Master Repurchase Agreement full text of Clause 1: 1. Applicability 1(a) From time to time the parties hereto may enter into Transactions in which one party, acting through a Designated Office, (“Seller”) agrees to sell to the other, acting through a Designated Office, (“Buyer”) Securities and financial instruments (“Securities”) (subject to paragraph 1(c), other than equities and Net Paying Securities) against the payment of the purchase price by Buyer to Seller, with a simultaneous agreement by Buyer to sell to Seller Securities equivalent to such Securities at a date certain or on demand against the payment of the repurchase price by Seller to Buyer. 1(b) Each such transaction (which may be a repurchase transaction (“Repurchase Transaction”) or a buy and sell back transaction (“Buy/Sell Back Transaction”) shall be referred to herein as a “Transaction” and shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto, unless otherwise agreed in writing. 1(c) If this Agreement may be applied to (i) Buy/Sell Back Transactions, this shall be specified in Annex I hereto, and the provisions of the Buy/Sell Back Annex shall apply to such Buy/Sell Back Transactions; (ii) Net Paying Securities, this shall be specified in Annex I hereto and the provisions of Annex 1, paragraph 1(b) shall apply to Transactions involving Net Paying Securities. 1(d) If Transactions are to be effected under this Agreement by either party as an agent, this shall be specified in Annex I hereto, and the provisions of the Agency Annex shall apply to such Agency Transactions. view template Resources: 2010 GMRA: Full wikitext · Nutshell wikitext Navigation 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 Index: Click ᐅ to expand: GMRA Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

What is a repo?

In a Nutshell™: A repo, or repurchase agreement, and its close relation the sell/buy-back, is a way of borrowing government bonds.

Documentation: Repos are most commonly documented under a 2000 Global Master Repurchase Agreement, the industry standard English law agreement, published by TBMA and ICMA

Structure: Repos are structured as a spot DVP sale at market, and a later DVP repurchase, also at market, of the same securities (hence, “repurchase”). In any case there is always a cash leg — by which the “Buyer” pays for the govvies — and a securities leg — by which the Seller delivers them. Contrast that with a stock loan where both the Loan and the Collateral leg are physical settlements of securities.

Term: Repo trades are usually very short term, typically overnight.

Reverse repo: a reverse repo is just a repo from the point of view of the buyer. The Buyer buys and agrees to sell back later; the Seller sells and agrees to buy back later.