Failure by either Party to deliver - GMSLA Provision
2010 Global Master Securities Lending Agreement
Clause 9.3 in full
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See the discussion on mini close-out under the 2010 GMSLA (and the 1995 Overseas Securities Lender's Agreement (OSLA) for that matter) and also the general discussion with regard to this clause in its wider context at clause 9.
Well, this old fellow’s opinion is no. Clause 11.7 of the 2010 GMSLA is specific to costs following actual close out on an Event of Default (a Buy-in isn’t an Event of Default), and only on professional expenses. The vibe here is you reimburse me my actual costs. So, the actual interest cost I incurred in funding the securities I bought in, rather than some abstract derivative notion of my costs represented by a benchmark.
Does it make sense to replace this clause with some convoluted shtick about the costs of Replacement Transactions or otherwise hedging the innocent party’s exposure? To determine follow this flow chart: