5.5 - GMSLA Provision: Difference between revisions

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====Commentary====
====Commentary====
See also {{gmslaprov|5.4}}, Collateralisation on aggregate, which will generally be the preferred alternative for most financial institutions.
See also {{gmslaprov|5.4}}, Collateralisation on aggregate, which will generally be the preferred alternative for most financial institutions.
====Summary====
In an {{nutshell}}:
{{box|
Where {{gmslaprov|5.5}} applies, the {{gmslaprov|Posted Collateral}} in respect of any {{gmslaprov|Loan}} bears the same proportion to the {{gmslaprov|Market Value}} of the {{gmslaprov|Loaned Securities}} as the {{gmslaprov|Posted Collateral}} bore at the commencement of the {{gmslaprov|Loan}}. Accordingly: <br>
:(a) the {{gmslaprov|Market Value}} of the {{gmslaprov|Posted Collateral}} must always equal the {{gmslaprov|Required Collateral Value}}; <br>
:(b) whenever the {{gmslaprov|Market Value}} of the {{gmslaprov|Posted Collateral}} for any {{gmslaprov|Loan}} (including unpaid amounts and unpaid {{gmslaprov|Income}} on {{gmslaprov|Non-Cash Collateral}}) exceeds the {{gmslaprov|Required Collateral Value}} under the {{gmslaprov|Loan}} (including all amounts due by the {{gmslaprov|Borrower}} and <br>
::(ii) any {{gmslaprov|Income}} payable in respect of {{gmslaprov|Equivalent Securities}},<br>
:{{gmslaprov|Lender}} shall repay to {{gmslaprov|Borrower}} such Equivalent Collateral to eliminate the excess; and <br>
:(c) whenever the {{gmslaprov|Market Value}} of the {{gmslaprov|Posted Collateral}} together with: <br>
::(i) all amounts due by the Lender under the Loan; and <br>
::(ii) any {{gmslaprov|Income}} payable on {{gmslaprov|Non-Cash Collateral}} <br>
:falls below the {{gmslaprov|Required Collateral Value}} together with: <br>
::(i) all amounts due by the {{gmslaprov|Borrower}} under the {{gmslaprov|Loan}}; and <br>
::(ii) any {{gmslaprov|Income}} payable under the {{gmslaprov|Equivalent Securities}}, {{gmslaprov|Borrower}} shall (on demand) provide further {{gmslaprov|Collateral}} to {{gmslaprov|Lender}} to eliminate the deficiency.<br>
}}


====See Also====
====See Also====


{{gmslaanatomy}}
{{gmslaanatomy}}

Revision as of 10:09, 30 July 2015

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5.5 in a Nutshell™ (GMSLA edition)

5.5 Required Collateral Value (Single Loans): Where 5.5 applies, the Posted Collateral on any Loan must bear the same proportion to the Market Value of the Loaned Securities as it bore at the beginning of the Loan. Therefore:

(a) Required Collateral Value: the Market Value of the Posted Collateral (including income etc.) must always equal the Required Collateral Value;
(b) Returns: whenever the Market Value of the Posted Collateral for any Loan exceeds the Required Collateral Value Lender must return enough Equivalent Collateral to Borrower to eliminate the excess; and
(c) Further deliveries: whenever the Market Value of the Posted Collateral falls below the Required Collateral Value Borrower must provide further Collateral to Lender on demand to eliminate the deficiency.

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Commentary

See also 5.4, Collateralisation on aggregate, which will generally be the preferred alternative for most financial institutions.

See Also

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