Marking to Market of Collateral during the currency of a Loan on a Loan by Loan basis - 2000 GMSLA Provision

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2000 Global Master Securities Lending Agreement
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Clause 5.5 in a Nutshell
Use at your own risk, campers!

5.5 Marking to Market of Collateral during the currency of a Loan on a Loan by Loan basis
Where the parties agree in 1.3 of the Schedule that they will mark Collateral to market Loan-by-Loan under this paragraph (and not on an aggregated basis under paragraph 5.4) the Posted Collateral for any Loan must always bear same proportion to the Market Value of the Loaned Securities as it did when the Loan started. Therefore:

(i) the Market Value of the required Posted Collateral during the Loan continues will equal the Required Collateral Value;
(ii) if on any Business Day the Market Value of any such Posted Collateral exceeds the Required Collateral Value for the same Loan, Lender must return to Borrower enough Equivalent Collateral eliminate the excess on demand; and
(iii} if on any Business Day the Market Value of the Posted Collateral falls below the Required Collateral Value, Borrower must provide further Collateral to Lender to eliminate the deficiency, on demand.

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Full text of Clause 5.5

5.5 Marking to Market of Collateral during the currency of a Loan on a Loan by Loan basis
If paragraph 1.3 of the Schedule indicates this paragraph 5.5 shall apply in lieu of paragraph 5.4, the Posted Collateral in respect of any Loan shall bear from day to day and at any time the same proportion to the Market Value of the Loaned Securities as the Posted Collateral bore at the commencement of such Loan. Accordingly:

(i) the Market Value of the Posted Collateral to be delivered or deposited while the Loan continues shall be equal to the Required Collateral Value;
(ii) if at any time on any Business Day the Market Value of the Posted Collateral in respect of any Loan exceeds the Required Collateral Value in respect of such Loan, Lender shall (on demand) repay and/or redeliver, as the case may be, to Borrower such Equivalent Collateral as will eliminate the excess; and
(iii} if at any time on any Business Day the Market Value of the Posted Collateral falls below the Required Collateral Value, Borrower shall (on demand) provide such further Collateral to Lender as will eliminate the deficiency.

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Related agreements and comparisons

Related agreements: Click here for the same clause in the 2010 GMSLA
Comparison: Template:Gmsla2000diff 5.5

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Content and comparisons

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Summary

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See also

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References