Determination of Default Market Value - GMSLA Provision: Difference between revisions

Note that to determine a {{gmraprov|Default Market Value}} the counterparty must '''sell''' (''not'' buy) securities equivalent to those it is expecting back from a {{gmslaprov|Non-Defaulting Party}}. This, we think, is to ensure that the price is "real": the temptation otherwise would be for the {{gmslaprov|Non-Defaulting Party}} to accept any old bid or offer, safe in the knowledge it can pass the cost on to the {{gmslaprov|Defaulting Party}}.

Tricks to watch out for, especially in illiquid stocks, is that the NDP is not somehow influencing the price at which a third party might transact (by agreeing to enter an offsetting transaction at the same time). THat would be fraudulent, of course.