Default Market Value - 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 11.3 in a Nutshell
Use at your own risk, campers!

11.3 The Default Market Value of any Equivalent Securities will be determined under paragraphs 11.4 to 11.6 below, where:

Appropriate Market is the most appropriate market for any securities determined by the Non-Defaulting Party;
Default Valuation Time means the Close of Business in the Appropriate Market on the fifth dealing day after the Event of Default;
Net Value of any securities means the Non-Defaulting Party’s reasonable opinion of their fair Market Value less (where Lender is the Defaulting Party) or plus (where Borrower is the Defaulting Party), all reasonable costs of any transaction needed under paragraph 11.4 or 11.5 (Transaction Costs).

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Full text of Clause 11.3

11.3 For the purposes of this Agreement, the Default Market Value of any Equivalent Securities shall be determined in accordance with paragraphs 11.4 to 11.6 below, and for this purpose:

11.3(a) the Appropriate Market means, in relation to Securities of any description, the market which is the most appropriate market for Securities of that description, as determined by the Non-Defaulting Party;
11.3(b) the Default Valuation Time means, in relation to an Event of Default, the Close of Business in the Appropriate Market on the fifth dealing day after the day on which that Event of Default occurs;
11.3(c) Net Value means at any time, in relation to any Equivalent Securities, the amount which, in the reasonable opinion of the Non-Defaulting Party, represents their fair Market Value, having regard to such pricing sources and methods (which may include, without limitation, internal and external pricing sources, and available prices for Securities with similar maturities, terms and credit characteristics as the relevant Equivalent Securities) as the Non- Defaulting Party considers appropriate less, where Lender is the Defaulting Party, or plus, where Borrower is the Defaulting Party, all Transaction Costs incurred or reasonably anticipated in connection with the purchase or sale of such Securities; and
11.3(d) Transaction Costs in relation to any transaction contemplated in paragraph 11.4 or 11.5 means the reasonable costs, commissions (including internal commissions), fees and expenses (including any mark-up or mark-down or premium paid for guaranteed Delivery) incurred or reasonably anticipated in connection with, where Borrower is the Defaulting Party, the purchase of Equivalent Securities or, where Lender is the Defaulting Party, the sale of Equivalent Securities, calculated on the assumption that the aggregate thereof is the least that could reasonably be expected to be paid in order to carry out the transaction.

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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

Patient observers will note that the 2018 Pledge GMSLA version is quite a lot shorter. This is because there’s no need for AET — being a pledge construct it doesn’t rely on netting in the first place — and all that malarkey about the valuation of Equivalent Collateral is a bit otiose too. Also no faffing around with letters of credit.
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Summary

Template:M summ Pledge GMSLA 11.3
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See also

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References