Acceleration - Pledge GMSLA Provision

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2018 Global Master Securities Lending Agreement (Pledge Version)
A Jolly Contrarian owner’s manual™

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GMSLA

Clause 11.2 in a Nutshell
Use at your own risk, campers!

11.2 Acceleration: Borrower’s obligations will be accelerated as at the time of the Event of Default (the Termination Date) as follows:

11.2(a) The Non-Defaulting Party will determine the Default Market Value of the Borrower’s delivery and payment obligations under paragraph 11.4 as at the Termination Date.
11.2(b) Using those values, [the Non-Defaulting Party will determine and notify][1]what each Party owes as at the Termination Date, converting amounts into the Base Currency at the Spot Rate where necessary, and will set those sums off against each other. The Party owing the greater amount must pay the difference on the Business Day after notification.

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Full text of Clause 11.2

11.2 Borrower’s Delivery and payment obligations (and any other obligations Borrower has under the Agreement including, without limitation, any obligation to pay amounts which have accrued under paragraph 7) shall be accelerated so as to require performance thereof at the time such Event of Default occurs (the date of which shall be the Termination Date) so that performance of such obligations shall be effected only in accordance with the following provisions.

11.2(a) The Default Market Value of the Equivalent Securities to be delivered by Borrower and any amount (including interest accrued) to be paid by Borrower shall be established by the Non-Defaulting Party in accordance with paragraph 11.4 and deemed as at the Termination Date.
11.2(b) On the basis of the sums so established, an account shall be taken (as at the Termination Date) of what is due from each Party to the other under this Agreement (on the basis that Lender's claim against Borrower in respect of Delivery of Equivalent Securities is equal to the Default Market Value thereof) and the sums due from one Party shall be set off against the sums due from the other and only the balance of the account shall be payable (by the Party having the claim valued at the lower amount pursuant to the foregoing) and such balance shall be payable on the next following Business Day after such account has been taken and such sums have been set off in accordance with this paragraph. For the purposes of this calculation, any sum not denominated in the Base Currency shall be converted into the Base Currency at the spot rate prevailing at such dates and times determined by the Non-Defaulting Party acting reasonably.

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Related agreements and comparisons

Related agreements: Click here for the same clause in the 2010 GMSLA
Comparison: Click to compare the 2010 GMSLA and 2018 Pledge GMSLA versions of this clause.

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Content and comparisons

11. Consequences of an Event of Default

11.1 Application of 11.2 to 11.7 following Event of Default
11.2 Delivery and payment obligations following Event of Default
11.3 Definition of Default Market Value
11.4 Determination of Default Market Value
11.5 Net Value determination where unable to sell Securities
11.6 Where Non-Defaulting Party has not determined Default Market Value
11.7 Other costs, expenses and interest payable in consequence of an Event of Default
11.8 Set-off

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Summary

Multi-level set-off

Paragraph 11.2(b) sets up a set-off of amounts due under the 2010 GMSLA to create a single net payment due under the 2010 GMSLA in respect of all terminated transactions. The Non-Defaulting Party can, in turn, set that net sum off against amounts owed to or by the Defaulting Party under other agreements (such as an ISDA Master Agreement.
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General discussion

Template:M gen Pledge GMSLA 11.2
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See also

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References


  1. Well, we assume it will be the NDP: the 2018 Pledge GMSLA rather brilliantly puts it into an unattributed passive, as if God is going to to it, or it will magically happen by itself. Go, ISLA’s crack drafting squad™.