Manufactured payments in respect of Non-Cash Collateral - GMSLA Provision

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2010 Global Master Securities Lending Agreement
A Jolly Contrarian owner’s manual

Clause 6.3 in a Nutshell
Use at your own risk, campers!

6.3 Manufactured payments in respect of Non-Cash Collateral
Where Borrower provides the Lender with Non Cash Collateral over an Income Record Date Lender must, on the date the Income is paid, manufacture an equivalent amount of Income to Borrower that Lender would have received on that Non Cash Collateral had it held it on the Income Record Date and not been entitled to any Tax relief on that payment under Applicable Law.
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Clause 6.3 in full

6.3 Manufactured payments in respect of Non-Cash Collateral
Where Non Cash Collateral is delivered by Borrower to Lender and an Income Record Date in respect of such Non Cash Collateral occurs before Equivalent Collateral is delivered by Lender to Borrower, Lender shall on the date such Income is paid, or on such other date as the Parties may from time to time agree, pay or deliver to Borrower a sum of money or property as is agreed between the Parties or, failing such agreement, a sum of money or property equivalent to (and in the same currency as) the type and amount of such Income that would be received by Lender in respect of such Non Cash Collateral assuming Lender:

(a) retained the Non Cash Collateral on the Income Record Date; and
(b) is not entitled to any credit, benefit or other relief in respect of Tax under any Applicable Law.

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Related agreements and comparisons

Related agreements: Click here for the same clause in the 2018 Pledge GMSLA
Comparison: Template:Gmsladiff 6.3

Resources and navigation

2010 GMSLA: Full wikitext · Nutshell wikitext | GMLSA legal code
Pledge GMSLA: Hard copy (ISLA) · Full wikitext · Nutshell wikitext |
1995 OSLA: Full wikitext · Nutshell wikitext | GMSLA Netting
Let me Google that for you: Guide to equity finance | ISLA’s guide to securities lending for regulators and policy makers
2010 GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · Schedule · Agency Annex · Addendum for Pooled Principal Agency Loans
2018 Pledge GMSLA 1 · 2 · 3 · 4 · 5 · 6 · 7 · 8 · 9 · 10 · 11 · 12 · 13 · 14 · 15 · 16 · 17 · 18 · 19 · 20 · 21 · 22 · 23 · 24 · 25 · 26 · 27 · 28 · Schedule · Agency Annex

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Content and comparisons

Template:M comp disc GMSLA 6.3


Template:M summ GMSLA 6.3

General discussion

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See also

Template:M sa GMSLA 6.3


There is quite a lot of hedging around with conditionals — “the amount the Lender would have received had it held...” — that looks quite unnecessary — and truthfully, is — but is designed to cater for the details freak/paranoid weirdos in the legal department, because (a) being a title transfer agreement, the Lender is not obliged to, and may well not, hold on to any collateral it has been delivered, and thus may not be entitled to interest on the Collateral at all, and (b) the Lender is only obliged to manufacture the payment if the Collateral Issuer actually makes the payment, and not if it is obliged to make the payment, but then fails to (because it has blown up, for example.

So there's a sort of four way matrix here to determine whether a Lender has to manufacture a payment.

Manufactured income matrix Lender held Collateral Lender reused Collateral
Issuer made payment Yes Yes
Issuer failed payment No No

Snafu under the 2000 GMSLA

Note this is all somewhat complicated under the 2000 GMSLA because the drafting committee rather muffed their job. See Clause 6.1 re Manufactured Payments.