6(j) - GMRA Provision
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2000 Global Master Repurchase Agreement
Clause 6(j) in a Nutshell™ Use at your own risk, campers!
Full text of Clause 6(j)
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Content and comparisons
Oddly — actually, come to think of it, not oddly, but sensibly — the otherwise quite comparable 2010 GMSLA doesn’t have a flawed asset provision like the Global Master Repurchase Agreement’s Clause 6(j) (the closest it gets is Paragraph 8.6), even though in most every other respect, it’s very similar to the Global Master Repurchase Agreement.
Summary
Clause 6(j) is the Global Master Repurchase Agreement's version of the ISDA Master Agreement’s Section 2(a)(iii): it is a flawed asset provision, though in an agreement without any particular need for one. Unlike the ISDA’s version, it's toggle-able, suggesting the framers of the Global Master Repurchase Agreement were somewhat embarrassed to include it. Rightly, because a flawed asset clause doesn’t make a colossal amount of sense in an intrinsically margined, callable transactions like a repo agreement.
See also
- The flawed asset concept generally
- Section 2(a)(iii) of the ISDA Master Agreement: where all this nonsense started.